The U.K.’s financial watchdog published advice for crypto companies after just 14% of the firms looking to win regulatory approval in the country passed muster.
The extensive list of tips covers what applicants need to consider before, during and after submitting their applications for registration to the Financial Conduct Authority (FCA).
In the post, the regulator said only 41 of the 300 crypto companies applying for registration since it opened its registration regime two years ago managed to win full approval. Of the applications considered, 195 companies were either refused or withdrew their application and 29 were rejected, the regulator said.
“This feedback should help applicants when they prepare their application for registration and help make the process as simple and efficient as possible,” the note said.
The regulator came under fire from the industry and even some lawmakers who felt it was not handling the process well, leading to an exodus of crypto companies. The FCA recently pledged a friendlier approach that aligns with the government’s plans to turn the country into a crypto hub.
When preparing their applications, crypto firms should include details of a business model, roles and responsibilities of business partners, and demonstrate comprehensive business-wide risk-assessment capabilities. It should also show that the business has policies, systems and controls to manage risk, the FCA said.
Crypto service providers with a registered head office in the U.K. and that run their operations in the country are expected to apply with the FCA and those that do should have a money laundering reporting officer who “should be fully involved in the preparation of the application,” the FCA said on its page.
Once the application has been submitted, “applicants should be proactive and self-reliant,” the FCA said.
“Applicants must recognize that being registered is not a one-off formality or a tick-box exercise without any further obligations or interaction with the FCA,” the regulator added.
U.K. lawmakers are currently debating the Financial Services and Markets Bill which should give the FCA more powers over to police the crypto industry.
