A new report from the Financial Conduct Authority (FCA) reveals that 85% of cryptocurrency companies that applied for licenses from regulators did not meet minimum standards.
Released on January 26, reportIt was commissioned by the Finance Committee of Parliamentarians and revealed concerns that anti-money laundering and anti-terrorist financing requirements were not being complied with.
While the UK has not established a structured management system for digital currencies, the FCA is asking all companies dealing in cryptocurrencies to register with an anti-money laundering system in order to continue to provide services in the country. I am requesting
Crypto Confessions: What the FCA Finds?
At a recent meeting of the Finance Committee, the Financial Conduct Authority (FCA) revealed that a significant percentage of recent filings from cryptocurrency companies were found to be “low standards.”
Overall, the FCA reports that 73% of applications have been withdrawn or denied, a much higher failure rate than when regulators took on new mandates.
In some extreme cases, the FCA identified potential links to financial or organized crime and promptly referred these companies to relevant law enforcement agencies.
In addition, regulators have found that some key personnel at some firms “lack the appropriate knowledge, skills and experience to perform their roles and effectively manage risk.” discovered.
“We are in the midst of an investigation into cryptocurrency regulation and these statistics do not negate the impression that parts of this industry are the ‘Wild West’.”
Harriet Baldwin, Finance Committee.
The troubled relationship between crypto companies and the FCA
Crypto companies and the Financial Conduct Authority (FCA) have had a tumultuous relationship over the past few years.
Since FCA It took over The two sides have been at odds over the FCA’s stance on the sector after crypto regulation came into force in the UK in January 2020.
The FCA takes a tough stance on cryptocurrency companies with strict regulations on how they do business, including banning them from providing certain services. This has resulted in several cryptocurrency companies being fined heavily by the FCA for failing to comply with FCA rules.
Nevertheless, the FCA says it is open to innovation and willing to work with cryptocurrency companies to ensure proper regulation is implemented.
However, the FCA has been criticized for being slow to respond to the crypto industry and needing to clarify how crypto companies should be regulated. As a result, many cryptocurrency companies have chosen to focus on jurisdictions with more welcoming regulatory environments.
road ahead
Cryptocurrency companies are one of the least exemplary groups in complying with regulatory standards. This has become more and more apparent in recent years as governments around the world have introduced stricter regulations in the cryptocurrency space.
In the past few years alone, several large cryptocurrency companies have been fined hefty by regulators for failing to comply with their KYC and AML policies. Coinbase, one of the largest cryptocurrency exchanges, fined him $6.5 million by the U.S. Commodity Futures Trading Commission in March 2021 for violating regulations.
Regulators are serious when they say they will punish those who do not follow their standards. Therefore, crypto companies need to take a proactive approach to complying with regulations. Failure to do so can result in serious consequences not only for fines and penalties, but also for their reputation.