UK Financial Conduct Authority: Temporary Registration Regime Extended For Cryptoasset Businesses

The FCA is extending the end date of the Temporary Registrations Regime (TRR) for existing cryptoasset businesses from 9 July 2021 to 31 March 2022.

The TRR was established last year to allow existing cryptoasset firms that applied for registration before 16 December 2020, and whose applications are still being assessed, to continue trading.

A significantly high number of businesses are not meeting the required standards under the Money Laundering Regulations. This has resulted in an unprecedented number of businesses withdrawing their applications.

The extended date allows cryptoasset firms to continue to carry on business while the FCA continues with its robust assessment.

Anti-money laundering and counter terrorist financing legislation are aimed at protecting against enabling the transfer and disguise of funds from criminal activity, or funding of terrorist groups.

While this is not the only element that the FCA will assess in relation to an applicant, the FCA will only register firms where it is confident that processes are in place to identify and prevent this activity.

Consumer protection

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, it is not responsible for making sure cryptoasset businesses protect client assets (ie customers’ money), among other things.

Cryptoassets are considered very high risk, speculative investments. If consumers invest in cryptoassets, they should be prepared to lose all their money. 

It is unlikely that consumers will have access to the Financial Ombudsman Service or Financial Services Compensation Scheme, irrespective of whether a firm has temporary or full registration.

Background:

1. 2020 Temporary Registration Regime press release 
2. Registered Cryptoasset firms
3. Cryptoasset firms with Temporary Registration
4. Since 10 January 2020, existing businesses (operating before 10 January 2020) carrying on cryptoasset activity in the UK have needed to be compliant with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 , as amended and need to be registered with the FCA. 
5. The FCA is advising customers of cryptoasset firms that should have applied to the FCA, but have not done so, to withdraw their cryptoassets or money. 
6. Information for consumers on cryptoassets
7. Find out more about the FCA.