UK Crypto Register: Full List of Financial Conduct Authority-Approved Firms

• The United Kingdom unveiled a comprehensive suite of documents addressing stablecoin regulation.
• PayPal UK Ltd has registered as a crypto service provider with the FCA.
• Two companies have joined the list in 2024.
• The UK Treasury has unveiled its final proposals for regulating crypto asset activities.
• New advertising regulations demanding crypto companies present transparent risk labels came into effect in October 2023.

The UK’s Financial Conduct Authority has started issuing licenses to complaint crypto exchanges. These are listed below , along with dates when their license was issued.

Crypto Companies With An FCA Licence

The UK government announced in April 2022 plans to turn the country into a hub for cryptocurrency asset investment and technology.

The EU and UK plan to implement legislation specifically for cryptocurrencies throughout 2023, which will provide the market for digital assets with a level of security and responsibility that it has never had before.

The EU’s Fifth Anti-Money Laundering Directive (5AMLD) no longer imposes legal obligations on the UK. However, the country still chose to incorporate the requirements for regulating cryptocurrencies from 5 AMLD and 6 AMLD into domestic law.

The Financial Promotions Regime , presently the subject of consultation, and the Financial Services and Markets Bill , which addresses stablecoin regulation, are further pertinent laws. Crypto asset exchange providers, who exchange crypto assets for cash or another cryptocurrency or who swap crypto assets, and custodian wallet providers, who look after or manage crypto assets on behalf of their clients, are examples of cryptocurrency firms that must register.

FCA Rejected 90% Of Applications

The UK’s Financial Conduct Authority (FCA) has rejected the vast majority of cryptocurrency registration applications in its latest review, underscoring crypto firms’ challenges in complying with the country’s stringent anti-money laundering (AML) regulations.

Only four of the 35 applications reviewed in the fiscal year ending March 31 were approved. The FCA named BNXA, a PayPal UK unit, and Komainu successful registrants. However, many applicants either withdrew their requests, were outright rejected, or failed to submit complete applications.

Since taking over oversight of the UK’s crypto asset sector in 2020, the FCA has received 359 registration applications, approving only 47. Despite efforts to provide clear guidance, many crypto companies continue to struggle with the UK’s regulatory framework. Long wait times and limited feedback from the FCA have led to frustration, and some firms have chosen to leave the country.

Stablecoin Regulation to Foster Secure Crypto Ecosystem

On Nov. 6, 2023, the United Kingdom unveiled a comprehensive suite of documents addressing stablecoin regulation. These documents included a discussion paper from the Financial Conduct Authority (FCA) and a similar paper from the Bank of England (BOE).

Alongside these, the BOE’s Prudential Regulatory Authority (PRA) released a letter directed to the CEOs of deposit-taking institutions, and the BOE itself provided a “cross-authority roadmap” to facilitate connectivity between these elements.

The stage for this release was set on Oct. 30 when His Majesty’s Treasury outlined its regulatory intentions in a brief document. However, the FCA’s discussion paper went into significantly greater detail on the subject.

The FCA emphasized that stablecoin regulation represents the initial step towards a broader regulatory framework for crypto assets. Their discussion paper explored potential use cases for stablecoins in both retail and wholesale settings. Among the topics discussed were the need for auditing and reporting, the backing of coins by the issuer, and the independence of custodians responsible for these backing assets.

A focal point of the discussion was the application of the “same risk, same regulator outcome” principle. The paper proposed utilizing the existing client assets regime as the foundation for crafting rules regarding redemption and custodianship.

Additionally, it suggested referencing the sourcebook on senior management arrangements, systems, and controls for the organization of business affairs. Notably, the regulatory framework encompasses various aspects, including operational resilience and financial crime prevention.

Two Adds In 2024 So Far

Only two companies have entered the list of approved crypto firms by the FCA in the UK so far in 2024. On Feb. 9, 2024, the first was Banxa UK VASP (BNXA) , a payments infrastructure provider known for facilitating fiat processing for major exchanges like Binance and OKX. It helps ensure compliance with regulatory requirements, even as these exchanges await FCA approval.

Brinda Paul, UK Managing Director, said ,

“Banxa believes the FCA’s high standards, focusing on robust business models, corporate governance, risk management and compliance validates the Company’s commitment to support crypto asset adoption and the development of the crypto market in the UK while doing so in a compliant manner.”

The second company was Portofino Technologies UK . Founded in 2021, Portofino Technologies is a market-making liquidity provider with a focus on trading infrastructure for the digital sector. By the end of 2023, the company had reportedly raised $50 million in funding from investors, including Coatue Management, Valar Ventures, and Global Founders Capital.

The FCA approval enables Portofino to connect with major banks, trading platforms, brokers, and institutional investors. Additionally, it allows the firm to offer over-the-counter trading services in the UK and Switzerland.

PayPal Joins FCA-Approved Crypto Companies in the U.K.

The UK Financial Conduct Authority (FCA) website confirmed that PayPal, the financial services giant, has successfully registered as a crypto service provider.

PayPal UK Limited is permitted to engage in “certain cryptoasset activities” following its addition to the register on Tuesday. Companies that offer bitcoin services in the UK must be registered with the FCA and follow its anti-money laundering guidelines.

PayPal will now be allowed to authorize its own communications relevant to cryptocurrencies under the recently implemented marketing restrictions by landing on the register, which went live in 2020. In August, PayPal announced that it was temporarily halting cryptocurrency sales in the country in order to comply with the regulations.

This year, PayPal became the fourth company to receive the FCA’s crypto registration, following Bitstamp, Komainu, and Interactive Brokers.

“The FCA has approved PayPal UK Limited as an authorised electronic money institution and consumer credit firm, and registration as a cryptoasset business, enabling the transfer of PayPal’s UK customer accounts to this new UK entity from PayPal Europe on Nov. 1, 2023,” the company stated .

It further said there had been a shift following the UK’s exit from the E.U. PayPal Europe has thus far catered to customers in the United Kingdom, offering its users the same products and services.

U.K. Treasury Final Plans for Regulation Unveiled

The UK government released the final recommendations for regulating crypto assets, which gave a thorough response to its consultation. These proposals were based on information from experts, businesses, and market events, “including the failure of FTX.”

The recommendations express the UK government’s desire to include some activities related to cryptocurrency assets inside the financial services regulatory purview for the first time. “The government’s position is that firms dealing directly with UK retail consumers should be required to be authorized irrespective of where they are located,” the report stated.

The memo outlined the new requirement for enterprises engaging in crypto asset activity to obtain authorization from the Financial Conduct Authority of the United Kingdom. The authorization would stipulate that cryptocurrency exchanges must develop comprehensive guidelines for admission and require disclosures when listing new assets.

Lack of Established Regulations for DeFi

The report stated that DeFi regulation would not be undertaken at this stage of development, and the final plans did not address the regulation of decentralized finance.

“In line with consultation responses, HM Treasury recognizes that it would be premature and ineffective for the UK to regulate DeFi activities currently. Instead, the government will support efforts at the international level through work at both the FSB and standard-setting bodies to inform a future domestic framework,” the report said .

As per the UK Treasury, the ultimate plans aim to fulfill the country’s desire to lead the financial services sector regarding innovation and technology related to crypto assets.

The report also mentioned that the proposal aims to create conditions for crypto asset service providers to operate and grow in the UK while managing potential consumer and stability risks.

Finalizing Crypto Regulatory Framework

After the consultation period for the most extensive regulatory system for cryptocurrencies expired in April, the Financial Conduct Authority (FCA) released the recommendations on crypto advertising in June of this year.

The United Kingdom aims to foster a favorable climate for both service providers and customers by implementing clear regulations in a prompt and proactive manner. While crypto businesses must be open and honest about how they operate to demonstrate their resiliency and sustainability, customers must also be aware of the hazards typical of cryptocurrencies. These include high volatility, frauds, and hacks, just as with any other early-stage financial instrument. British authorities have taken swift action to eliminate regulatory uncertainty. This is a major factor in the list of “reasons why crypto growth is hindered.”

Cans and Can’ts

The U.S.s Financial Conduct Authority (FCA) has issued new regulations that apply to all cryptocurrency marketin. Thee regulation, which willd take effect on Oct. , prohibit rewards like referral bonuses8.

Some cryptocurrency companies, including PayPal , Luno , and Bybit, have decided to leave Britain due to the new regulations. In March 2023, Binance cancelled its FCA registration. This primarily means that UK-based cryptocurrency companies will have the chance to gain a competitive edge regarding their regulatory strategy. On the other hand, it forces cryptocurrency service providers to reconsider how they may assist customers in making wise investment decisions without using promotional material.

Centralized exchanges have been assigned the crucial task of serving as the primary onboarding point for crypto enthusiasts, particularly novices. Although Bybit and Binance may have given up, some companies are still making additional efforts to broaden their product offerings.

Bitget And OKX

Bitget, with its ecosystem of associated activities, from launchpad to initial listing, launch pool, and structured and/or principal-guaranteed investment product range, is one of the remaining possibilities for UK cryptocurrency proponents. Considering product innovation and regulatory compliance in a very fast-paced environment, it is a significant workload. Still, they are doing it in exchange for the widespread acceptance of cryptocurrencies, which should benefit all parties.

OKX is also a noteworthy name. In addition to providing a wide variety of conventional trading choices, it has extensive NFT Marketplace functionality and the Web3 Yield platform.Despitef previous difficulties like the 2020 fund-freezing episode, OKX is still committed to strong security measures.

Another prerequisite for promoting cryptocurrency is “clear risk warnings.” This is beneficial because users must take responsibility for their actions and educate themselves about cryptography from both a descriptive and a technical standpoint. Each of Bitget, OKX, KuCoin, Bybit, and Binance has a dedicated section with educational resources called academy, where anyone may find the necessary compass to travel through the constantly changing landscape of cryptocurrency.

These examples demonstrate how the FCA’s new P.R.R. regulations may be “worked around” while providing the ideal environment forsuccess of crypto enterprisess.

Complying With Travel Rule

The “Travel Rule ,” which took effect on Sept. 1, 2023, obliges UK-based enterprises that deal in crypto assets to gather, confirm, and share data about crypto asset transfers.

The Travel Rule, which harmonizes procedures for sending and receiving transactions by enterprises dealing in crypto assets with those used by other financial services industries, must be fast-implemented by other jurisdictions by the Financial Action Task Force (FATF) .

In June 2023, FATF emphasized the difficulties brought on by the Travel Rule’s uneven enforcement across jurisdictions and delays in its adoption.

How Does the FCA Work?

Companies in the UK that can “carry out crypto asset activities” must enter the crypto register with the FCA or receive temporary operating permission. The financial watchdog previously issued “shut down or face further action” orders for local crypto ATM providers and a suspension order for Binance Markets Limited’s UK operations.

Legislators in the UK have advocated a comprehensive legal framework for crypto-assets to give cryptocurrencies a bigger role in the country’s financial services sector and foster innovation in the field.

FCA says it wants to see how it might strengthen the market integrity of the asset class with its counterparts around the world, given how crypto transcends national boundaries.

The Government’s consultation suggests granting FCA authority over entities engaged in cryptocurrency-related activities that don’t originate from or have a basis in the UK but do offer services to UK customers.

The Treasury may decide to implement equivalent rules in the future. Companies with overseas authorization can offer services in the UK without needing a local presence. For this to operate, equivalent standards and a suitable and efficient framework for collaboration must exist in that nation.

However, FCA admits that the development of many jurisdictions’ approaches to regulating crypto assets and services is still in its early stages.