Britain’s Financial Conduct Authority or FCA has warned investors against dealing with 111 crypto companies that are yet to register their operations with the agency. Starting January 2021, the FCA made it mandatory for crypto-related businesses to register with the body and comply with its Anti-Money Laundering(AML) and Counter-Terrorist Financing laws. FCA Asserts 111 Unregulated Crypto Firms Pose a Real Risk The FCA has stepped up its vigilance of the crypto industry in light of the burgeoning growth of demand for digital assets. As per its consumer survey, 2.3 million Britons indicated ownership of cryptocurrencies. However, the same survey revealed that investor’s understanding of the assets they own has declined sharply. Mark Steward, FCA’s head of enforcement, addressed the issue of unregistered crypto firms at an event on June 22. Steward spoke about the consequences that banks, consumers, and payment companies could potentially face while dealing with such unregulated entities. He stated, “We have a number of firms that are clearly doing business in the UK without being registered with us and they are dealing with someone: banks, payment services firm, consumers. This is a very real risk so we are worried about that.” Citing the Dutch tulip mania of the 1630s, Steward suggested that investors are driven by the fear of missing out on a crypto boom, regardless of “how volatile these instruments actually are”. Backlogs and Operational Difficulties Deter Companies From Registration The U.K government has been ramping up its efforts to restrict the use of cryptocurrencies for money laundering and terrorism financing. With FCA’s appointment as the supervisor for AML regulations, the country made it compulsory for crypto-assets firms to register with the agency. Companies operating before Jan 10 were required to apply for Temporary Registration Regime(TRR) to continue trading, while they waited for their registrations to be processed. But operational hurdles in the implementation of the new AML regulations have deterred as many as 51 companies to withdraw their registrations. The pandemic slowed the onsite processing of registrations and led to a backlog of applications. Following this, the FCA declared an extension in the deadline for temporary registrations, which has been moved from July 2021 to March 2022. In the meantime, crypto-related cybercrimes have spurred the London Metro Police into action. The law enforcement body has asked legislators to consider creating regulations that freeze crypto assets belonging to entities that are under criminal investigation. The authority has also demanded stricter rules that prohibit criminals from making crypto transfers.
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