GlobalBlock Digital Asset Trading Ltd (TSX-V:BLOK, OTC:BLVDF) has provided an update on the application by its wholly-owned subsidiary for registration as a crypto asset business with the Financial Conduct Authority (FCA) in the United Kingdom in accordance with anti-money laundering and counter terrorist financing regulations.
The application was filed on June 30, 2020, and the company has been operating since then under the provisions of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs), and the Temporary Registration Regime established by the FCA.
The Temporary Registration Regime is scheduled to expire on March 31, 2022.
After nearly 20 months of limited feedback from the FCA regarding the application, the company said GlobalBlock UK has now received a warning notice from the FCA indicating that it is “minded to refuse the application.” While the company continues to analyse the reasons set forth by the FCA in its warning, the FCA reasoning appears to be that based on its review of a limited number of transactions that took place prior to the company acquiring GlobalBlock UK in July 2021. The firm said that because of that review “the FCA suspects that GlobalBlock UK will fail to comply with its obligations under the MLRs.”
The company said it “strongly disagrees” with the concerns and conclusions raised by the FCA and firmly asserts that its procedures are in line with the MLRs. GlobalBlock UK has until March 23, 2022, to respond to the warning notice. It is taking advice from top experts and will present “a rigorous and fulsome response” to the FCA, said the company.
If the FCA, having considered GlobalBlock UK's representations, decides to turn down the application, GlobalBlock UK has the right of appeal. Meanwhile, GlobalBlock UK will remain under the Temporary Registration Regime and will be able to continue to operate while it responds to the FCA, and until a final decision is made by the FCA regarding its application.
In a statement, GlobalBlock CEO Rufus Round said: "Assets traded on crypto rails are on all counts inherently reflective of a higher standard than traditional finance. Not only are transactions eminently more traceable, but they are also subject to rules that are defined and verified by cryptographic processes and therefore resistant to human operational failings.”
He added: “GlobalBlock UK has engineered FCA compliance into its DNA. Our processes are identical to those that a traditional FCA regulated business would incorporate, save for the fact that the superior features of blockchain technology enhance our controls and procedures to the higher standard of crypto. With this is mind we are naturally disappointed with the FCA process as it is being currently applied.”
Round noted that the company is “confident” that on reviewing its operations in detail, “the robustness of our processes will become clear to the FCA and that their misgivings will be allayed.”
“We also acknowledge that the FCA has enormous pressure upon it to administer to the Temporary Registration Regime and make decisions relating to a large number of firms ahead of its self-imposed deadline,” added Round. “As a precaution, the company is analysing all options and considering other jurisdictions that would enable our trading to continue with minimal friction and that also provide greater optionality with regard to the ever-evolving regulatory landscape."
The company said it will issue additional information regarding the matters as it progresses the process with the FCA.
GlobalBlock, is a UK-based digital asset broker that provides a personalised telephone brokerage service, trading platform and mobile app. The firm's business alleviates the stress and worry from crypto trading by providing a secure platform to buy and sell over 80 different digital assets.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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