Under the current regulatory regime for crypto business carried on in the UK pursuant to the recent UK AML legislation regime, firms established in the UK and carrying on a crypto business prior to 20 December 2020 were required to register with the FCA under their Temporary Permissions Regime (TPR). Businesses which applied could legally continue to carry on crypto activities while their application was processed by the FCA. The FCA hoped to process all applications under the TPR by July 2021. However, the FCA has a backlog of applications and currently only five companies which applied have had their applications processed and have been accepted. The FCA has indicated that the setback is largely due to the difficulty of bringing fast-growing crypto companies in line with the existing regulations. As such, on 27 May 2021 the FCA announced that it had extended its TPR registration process to March 2022.
Companies that did not apply under the TPR must make a registration application to the FCA to establish a crypto asset business in the UK. They are not entitled to trade until their application has been processed and accepted by the FCA.
For a summary of the current regulatory regime for crypto business carried on in the UK pursuant to the recent UK AML legislation regime, please see our previous article.
Commentary
There is increased interest by crypto businesses to establish themselves in the UK and obtain registration from the FCA. Despite the delays that have occurred in the application process, the FCA registration regime under the AML regulations is seen as light touch. In addition, obtaining approval from the FCA provides kudos to the applicant’s crypto asset activities and gives customers some extra reassurance in dealing with highly speculative assets.
There is no doubt that increased regulation for crypto businesses is coming down the track in the UK. Crypto entrepreneurs see a first mover advantage in applying for early registration under this light touch process. This is to steal a march on the FCA’s likely expansion of its regulatory perimeter to include crypto currency under its FSMA full authorisation powers.
Rosenblatt can help
We have a wealth of experience across diverse sectors and closely collaborate with institutions, large and small companies (both public and private), start-ups, scale-ups and individual entrepreneurs.
The regulatory regime which applies to cryptoassets is increasing in complexity. Rosenblatt advises on all aspects of cryptoassets and regulatory law. In particular we can assist in helping crypto businesses obtain the correct authorisations and registrations from the FCA necessary for compliant operation of all forms of crypto investment activity.
Contact us
If you also want to take advantage of the early registration process, please contact the author listed below.
Author
Laura Clatworthy, Partner (laura.clatworthy@rosenblatt.co.uk)
