UK Crypto Businesses Get Reprieve as FCA Extends Consideration Period Until mid-2021
UK financial regulators will allow crypto firms with pending registration applications to continue to operate until the middle of 2021. The agency plans to use the extension to clear the applicant backlog as its operations have been hamstrung by the ongoing coronavirus pandemic.
FCA Announces Temporary Registration Regime for Crypto Companies
The UK Financial Conduct Authority (FCA) announced the news via a press statement issued on its website on Wednesday (Dec. 16, 2020). According to the press release the FCA has decided to establish a temporary registration regime for crypto firms in the country.
Under this new regime, crypto companies with pending application requests will be allowed to continue operating after Jan. 10, 2021. Explaining its decision, the FCA’s announcement reads:
“The Temporary Registration Regime is for existing cryptoasset businesses which have applied for registration before 16 December 2020, and whose applications are still being assessed. This is to enable those existing businesses to continue to trade after 9 January 2021 until 9 July 2021, pending the FCA’s determination of their application.”
However, firms that failed to meet the Tuesday, Dec. 15, 2020 deadline for submitting their registration applications must stop operating in the country from Jan. 10, 2021, while also refunding all customer deposits. Failure to comply with this directive could open such companies to criminal prosecution from the FCA.
According to the FCA, the decision to extend the consideration period for crypto firms licensing applications was due to the complex nature of the process. The UK regulator also blamed coronavirus restrictions as another reason for its inability to assess all the pending applications.
With unregistered firms set to go out of business at the start of 2021, the FCA is advising cryptocurrency traders in the country to ensure that they only do business with firms listed in its register.
Tough Cryptocurrency Regulations in the UK
The FCA continues to enforce strict regulations for cryptocurrency businesses operating in the UK. Back in August, the UK regulatory body included crypto exchanges and wallet providers under financial crime reporting laws. The new requirement would be enforced from January 2022. Earlier in 2020, the FCA released a new handbook for crypto startups, which saw the reduction of registration fees for businesses based on their revenues.
Also, the FCA is tough on unregulated crypto exchange platforms operating in the country. The UK regulatory watchdog has warned the public in the past about blacklisted firms not licensed to operate in the country.
In another bid to protect investors, the FCA in October officially banned the sale of crypto derivatives to retail investors. According to the financial watchdog, part of the reasons for the ban included a lack of understanding by retail consumers and crypto volatility. The FCA’s crypto derivatives ban will take effect on January 6, 2021.