LONDON, 16 December – The Financial Conduct Authority (FCA) has established a Temporary Registration Regime to allow existing cryptoasset firms, who have applied to be registered with the FCA, to continue trading. The FCA is advising customers of cryptoasset firms which should have applied to the FCA, but have not done so, to withdraw their cryptoassets or money before 10 January 2021.
From 10 January 2020, the FCA became the anti-money laundering and counter terrorist financing (AML/CTF) supervisor for blockchain-based asset firms, which includes companies that exchange money to and from cryptoassets and those that safeguard their customers’ cryptoassets. From this date, ‘existing cryptoasset businesses’ (ie firms operating immediately before 10 January 2020) have had to comply with the Money Laundering Regulations; such firms were required to be registered with the FCA by 10 January 2021.
New businesses (who began operating after 10 January 2020), are required to obtain full registration with the FCA before conducting business.
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.
The FCA was not able to assess and register all firms that have applied for registration, due to the complexity and standard of the applications received, and the pandemic restricting the FCA’s ability to visit firms as planned.
Firms that did not submit an application by 15 December 2020 will not be eligible for the temporary registration regime. They will need to return cryptoassets to customers and stop trading by 10 January 2021. Firms that do not stop trading by that date are at risk of being subject to the FCA’s criminal and civil enforcement powers.
The FCA is advising consumers who deal with cryptoasset firms to:
- Check if the firm they use is on the FCA’s Register or list of firms with Temporary Registration.
- If they are not, check whether they are entitled to carry on business without being registered with the FCA (this may apply if they are registered in a different country).
- If the firm is not entitled to carry on business, then consumers should withdraw their cryptoassets and/or money before 10 January 2021. This is because the firm will be operating illegally if it does not cease trading from 10 January 2021.
Many cryptoassets are highly speculative and can therefore lose value quickly. The FCA does not have consumer protection powers for the cryptoasset activities of firms. Even if a firm is registered with the FCA, the agency is not responsible for ensuring cryptoasset businesses protect client assets (ie customers’ money), among other things.
It is unlikely that customers will have access to The Financial Ombudsman or Financial Services Compensation Scheme, irrespective of whether a firm has temporary or full registration.
The notices comes after a number of crypto-related FCA moves this year including the issuance of the consultation “Extension of Annual Financial Crime Reporting Obligation” paper which seeks to make crypto firms regardless of operating turnover adhere to submitting an annual report on how they are dealing with their AML risk, and the outright ban of the sale of crypto-derivatives to retail consumers, announced in October.
Find out more information about the FCA.
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