The UK’s financial watchdog continues to maintain strict supervision of the emerging crypto industry in the country. Since January 10, 2020, 291 crypto asset businesses in the country have applied for registration under the 5th Anti-Money Laundering Directive (5MLD). However, the Financial Conduct Authority (FCA) has approved only 38 firms or 13% of received applications.
Strict Crypto Regime
The FCA disclosed these on Friday in its response to a Freedom of Information request. Despite approving only 38 applications, the regulator said it does not decline firms. It, however, further pointed out that it has so far refused five applications and rejected 22.
5MLD is a set of rules introduced in January 2020 to bolster the European country’s anti-money and counter-terrorist financing regime. The regulation is the revised version of the 4th Anti-Money Laundering Directive (4MLD) created in 2015.
Additionally, the FCA clarified that it refused certain applications because the applicants did not meet the conditions for registration under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 (MLRs). MLRs are a set of rules in the UK that outline the steps that business organizations must take to prevent money laundering and terrorist financing.
“Firms are required to provide the minimum information set out under regulation 57 of the MLRs; any firm that has not provided the required information will have their application rejected,” FCA noted.
Moreover, the financial markets supervisor noted that 155 crypto businesses withdrew their registration applications during the period. The applications were cancelled for a number of reasons, including not meeting the benchmark for registration as a digital asset exchange and crypto custody wallet provider.
UK Plans Crypto Rules
Meanwhile, the UK, like the rest of Europe, is making progress with putting in place rules to keep a close eye on the crypto industry. In June, King Charles III sanctioned a new law that classifies the trading of cryptocurrencies as a regulated activity and brings stablecoins under the scope of payment rules. The bill also includes measures to control the promotion of digital assets.
According to the FCA, the number of crypto holders in the UK more than double in 2022. As a result, the regulator is actively seeking to bring the marketing and advertising of cryptocurrencies in the country under close scrutiny. Supervisory rules in this regard are expected to come into force on October 8.
This article was written by Solomon Oladipupo at www.financemagnates.com.
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