FCA Defends Strict Crypto Firm Registration Amid Innovation Concerns

The FCA Defends Stringent Crypto Firm Registration Process

The Financial Conduct Authority (FCA) is standing firm on its rigorous registration process for crypto businesses, despite concerns that these stringent standards may stifle innovation within the industry.

FCA’s Commitment to High Standards

In a blog post on October 21, Val Smith, head of payments and digital assets at the FCA, emphasized that the agency’s experts “never turn applications down out of hand.” She stated, “We know that setting and maintaining standards people can trust is a key part of any thriving, competitive sector. That’s why we hold all firms seeking registration, not just crypto firms, to strong and universal standards.”

“We know that setting and maintaining standards people can trust is a key part of any thriving, competitive sector. That’s why we hold all firms seeking registration, not just crypto firms, to strong and universal standards.”

Addressing Illicit Activities

Smith addressed concerns over potential illicit activities, highlighting the risks associated with terrorism, organized crime, and human trafficking. She warned that any relaxation of standards could lead to a “race to the bottom” in regulatory practices.

Evaluation Process Explained

Regarding the evaluation processes, the FCA official explained that the regulator examines a firm’s internal controls, overall operations, and the people managing it. “Our decision on whether to register isn’t just based on the controls and systems firms have in place. We look at the environment they operate in, the people involved in these processes, and the customers they want to reach.”

“Our decision on whether to register isn’t just based on the controls and systems firms have in place. We look at the environment they operate in, the people involved in these processes, and the customers they want to reach.”

Registration Statistics

Smith’s defense of the FCA’s regulatory framework follows the release of its annual report, revealing that out of 35 crypto applications received in the year ending March, only four firms were approved. This statistic shows that over 87% of crypto registration attempts were either rejected, withdrawn, or denied, highlighting the challenges faced by new entrants in the U.K. crypto market.

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