UK's FCA Provides Worried Crypto Firms With Lifeline

Cryptocurrency businesses who have registered with the UK Financial Conduct Authority can now operate until mid-2021 under a new “temporary registration regime,” the watchdog said in a release this morning.

Firms that did not submit an application by December 15 are not eligible for the temporary registration regime. “They will need to return cryptoassets to customers and stop trading by 10 January 2021,” the FCA noted.

In January this year, the UK government asked all crypto firms to register with the FCA or face ceasing their business operations after the (now-defunct) January 2021 deadline. The regulatory body was elected at the time to supervise all anti-money laundering and counter-terrorist financing countermeasures for crypto businesses.

But imposition has proven difficult for authorities, who pointed out the complexity of the undertaking, claiming the ongoing coronavirus pandemic had limited their ability to accurately assess the businesses.

The FCA said in a statement, “[It] was not able to assess and register all firms that have applied for registration, due to the complexity and standard of the applications received, and the pandemic restricting the FCA’s ability to visit firms as planned.”

However, crypto businesses that began operating after January 10, 2020, are still required to obtain full registration with the FCA before conducting business, as they were established after the law was pushed ahead.

The delay is a lifesaver for many crypto businesses who are operating in the UK but have not received the FCA green signal yet. CryptoUK, a local self-regulatory body of crypto firms, told Decrypt that only four businesses had been registered so far while a reported 160 firms have turned in their applications.

The consortium added that this number could be as high as 300 firms, who all risked losing their business if the erstwhile January 2021 deadline continued to be active. However, today's announcement should quell those fears.

Meanwhile, the FCA stated that regardless of the registrations, it did not have any consumer protection powers for the activities done by the crypto firms. This means that even if a firm happens to lose a client’s money or infringe other legal rights, the registration could do little in a court of law.