The lack of clarity by the watchdogs has left the UK indecisive about its progress in crypto innovation. Numerous high-profile companies are now searching for crypto friendlier pastures.
As the FCA deadline nears, cryptocurrency-based companies could close their doors. The UK could be in for a mass exodus.
UK Regulatory Problems
The UK has not yet established regulations for the cryptocurrency market. Companies associated with the sector are required to register with Financial Conduct Authority (FCA), under the Temporary Registrations Regime, heeding Money Laundering Regulations.
According to the most recent reports, 33 firms have so far been able to register with the regulatory body. Only a few more days are left before the deadline set by the government. Crypto custodian Copper Technologies Ltd., Revolut Ltd. and 12 other platforms that have temporary registration systems for crypto-asset business would be subject to suspension if they failed to get approval.
Last week, B2C2 Ltd., a London-based crypto market maker and Trastra Ltd., both crypto digital banking apps Wirex Ltd. & Trastra Ltd., withdrew their names from the temporary register. After the FCA issued warnings to companies with temporary authorization, they were asked to withdraw their applications and close down any UK digital assets operations. Or go through the process and risk rejection.
Wirex assured that customers would not be affected by the withdrawal. Copper Technologies on the other hand confirmed that it is still in discussions with the FCA about establishing an entity in Switzerland to allow the platform to service UK customers, even if it does not receive a green signal.
CoinBurp, the latest company to disappear from the registrar, has been expelled by FCA. It now wants to work with customers through its Croatian subsidiary Wirex Digital. Other companies have begun to follow suit and have moved their operations to Europe with more flexible regulations in order to service customers in the UK.
Regulation of Crypto and DeFi
The Bank of England’s Financial Policy Committee had stated earlier that cryptocurrencies should be considered an economic function within the existing regulatory frameworks.
The BoE also stated that the legislative framework should be adjusted as needed to achieve a similar regulatory outcome. The Treasury and the BoE both seek to regulate stablecoins, while also ensuring that international efforts are in place to control DeFi applications.
CryptoPotato also reported that the UK’s advertising watchdog, Advertising Standard Authority (ASA), issued a warning about over 50 companies related to crypto. They warned Coinbase and eToro not to encourage people buying digital assets with credit cards, or to swap their pensions to Bitcoin.
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