A large number of crypto asset firms are still falling short of compliance with the UK’s anti-money laundering regulations, according to the country’s financial regulator.
On Thursday, the Financial Conduct Authority (FCA) said it is extending the end date of a registration scheme for crypto asset businesses to March 31, 2022, from 9 July 2021 to allow more firms to register with the watchdog while continuing to trade.
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However, the FCA said a “significantly high number of businesses” were not meeting the required standards under money laundering regulations, and as a result, an “unprecedented number” were deciding to withdraw their registration applications.
The FCA’s extension of its timeline marks another step in the ongoing push by financial regulators to play catch-up with the still largely unmonitored crypto sector, with concerns over crypto’s use on the black market and illegal payments having increased following a recent spate of cyberattacks that resulted in ransoms being paid in Bitcoin.
“Anti-money laundering and counter terrorist financing legislation are aimed at protecting against enabling the transfer and disguise of funds from criminal activity, or funding of terrorist groups. While this is not the only element that the FCA will assess in relation to an applicant, the FCA will only register firms where it is confident that processes are in place to identify and prevent this activity”, the FCA said in a statement.
The regulator also reiterated previous warnings that many crypto assets are “highly speculative and can therefore lose value quickly”, highlighting that it does not have consumer protection powers to cover crypto asset activities of businesses.
“Cryptoassets are considered very high risk, speculative investments. If consumers invest in crypto assets, they should be prepared to lose all their money”, the FCA said.
The main cryptocurrencies seemed unphased by the FCA’s announcement, with Bitcoin up 5.7% in the last 24 hours at US$39,409 in late morning trading, while Ethereum rose 6.6% to US$2,879.