FCA doubles down on hawkish crypto stance to fight money laundering

The FCA is defending its strict crypto company registration process despite concerns the approach could stifle innovation.

The UK Financial Conduct Authority has reaffirmed its commitment to a strict registration process for crypto businesses, addressing concerns that these tough standards could hinder innovation in the sector.

Val Smith, the FCA’s head of payments and digital assets, defended the agency’s stance in a blog post dated October 21, arguing that FCA experts “never reject applications out of hand.”

“We know that setting and maintaining standards that people can trust is an important part of a thriving and competitive industry. That’s why we subject not only crypto companies, but all companies that want to register, to strong and universal standards.”

Val Smith

Smith touched on concerns about the potential for illegal activities, noting the risks of terrorism, organized crime and human trafficking. He warned against any relaxation of standards, suggesting it could start a “race to the bottom” in regulatory practices.

Regarding assessment processes, the FCA official explained that the regulator looks at a firm’s internal controls as well as its overall operations and the people who manage it.

“Our decision about whether to register is not based solely on the controls and systems companies have in place. “We look at the environment in which they operate, the people involved in those processes, and the customers they want to reach.”

Val Smith

Smith’s defense of the FCA’s regulatory framework comes just months after the FCA released its annual report, revealing that only four firms had been approved out of 35 crypto applications received at the end of March. Statistics show that more than 87% of crypto registration attempts are rejected, withdrawn or rejected; This underlines the challenges faced by new entrants to the UK crypto market.