Firms should either be registered with the FCA or have been granted temporary status to operate in order to “carry out crypto asset activities” in the country. The regulator’s warning list contains details of unauthorised firms and individuals that FCA is aware of and aren’t allowed to operate in the UK.
The list alerts customers of the non-authorised firms that they “should avoid”. If they do otherwise, the person would not be covered by the Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS) if things go wrong. These are services that settle complaints between consumers and businesses that provide financial services, resolving disputes fairly and impartially.
Back in July, crypto financial promotions lead at the FCA, Jayson Probin, had also suggested that failure to comply could result in criminal charges: “We will take robust action against persons illegally promoting to U.K. consumers. This may include, but it is not limited to, placing firms on our warning list requesting take downs of websites, social media accounts, apps and all other promotions that are in breach, and enforcement action.”
Stating that almost all financial firms in the UK must be authorised or registered, the FCA in its latest release said that there are still firms that work without our authorisation.
The regulatory watchdog aims to add firms to its warning list as soon as possible. However, it also notified customers of the possibility of a firm being a scam and therefore, unauthorised, despite not being on the list. This is because unauthorised firms often change their names which makes FCA take some time before it becomes aware of it.
The FCA has been quite strict with the applications it receives from crypto companies for registration. It was revealed in August this year that since 2020, it has received 291 applications for registration, out of which only 38 of them have received the green light.
The FCA’s list of registered crypto asset providers includes 42 entities, such as Bitstamp, Revolut and Gemini.
Multiple crypto firms have pulled out from applying for registration in the UK recently. The month of June saw Binance Markets Limited (BML), the UK-based subsidiary of the exchange, withdraw its request for registration with the FCA.
The Bybit exchange also confirmed its decision to suspend its services in the country due to “regulatory changes” last month. It is currently in talks with the regulator ahead of its new marketing regulation. If the right compliance cannot be met by the exchange, there is also the possibility of Bybit exiting the UK altogether.
In August, payments platform PayPal temporarily halted cryptocurrency purchases for its UK customers until early 2024 to comply with local financial regulations. The move was made in response to new rules enacted by the FCA that requires crypto firms to adopt some additional steps before clients can buy cryptocurrency.
The regulator has been very vigilant about the use of cryptocurrencies in the country. Recently, it unleashed an investigation on crypto ATMs where 34 of them were visited and inspected since the start of 2023.
The FCA alleged that, out of this, 26 machines in different locations have been functioning illegally offering cryptocurrencies across the country. The inspection was in response to multiple incidents where people lost their cash after using crypto ATM transactions throughout the UK.