Crypto rush cash laundering fears: FCA approves simply 1 in 7 companies
Fewer than one in seven cryptocurrency firms that tried to register with the City watchdog were approved after it found high risks of money laundering.
Just 47 companies were successfully registered between January 2020 and April this year, figures from the Financial Conduct Authority (FCA) show.
Out of 344 applications received by the FCA, 233 were withdrawn and 48 rejected – while 16 were still pending at the time the figures were compiled.
The latest annual Treasury report on efforts to tackle money laundering and terrorist financing said the FCA did ‘robust’ assessments when firms first registered, which ‘identified significant weaknesses’ in money laundering controls.
That resulted in ‘a large number of companies withdrawing their applications or being rejected or refused by the FCA’.
Crime fears: Just 47 cryptocurrency firms were successfully registered between January 2020 and April this year, figures from the Financial Conduct Authority show
The data underlines the regulator’s high bar for allowing businesses that provide services such as consumer trading in digital currencies like Bitcoin.
Companies who have been given the green light include the trading platform eToro, Bitstamp and Revolut.
But the figures also appear to deal a blow to the Government’s hopes to make the UK a global hub for crypto.
The FCA has been the anti-money laundering ‘supervisor’ for crypto asset businesses operating in the UK since the start of 2020.
It is the latest example of the watchdog’s cautious approach to the crypto industry – which has run up against friction with ministers.
Fan: City minister Bim Afolami spoke at a crypto conference
The watchdog’s former chairman Charles Randell has previously warned that investors could be harmed if crypto assets were labelled as regular investments – effectively bringing them into the mainstream even though, he said, fraud is a ‘feature, not a bug’ in much of the industry.
But City minister Bim Afolami told a recent crypto conference that Randell was ‘completely wrong’.
He described the comments as ‘arrogant’ and ‘dangerous’, adding: ‘The job of government is to give as many opportunities for ordinary people to have a stake in their society, and to have a stake in their economy, as possible. Crypto is a key part of that.’
Afolami said, however, that while he had not ‘agreed with every single one’ of the FCA’s decisions ‘broadly, they are working with us’.
