The Financial Conduct Authority (FCA) has announced that the temporary registration regime for cryptoasset providers has been extended to 31 March 2020 from the initial date of 9 July 2021.
Citing that ‘a significantly high number of businesses are not meeting the required standards’ with regards to money laundering regulations, the FCA hopes that the extended date will allow crytpoasset firms to continue trading whilst it moves forward with its ‘robust assessment’.
Failure to meet the standards of the Money Laundering Regulations meant that an ‘unprecedented number of businesses’ were forced to withdraw their applications to register.
Established in 2013, the FCA became the anti-money laundering and counter-terrorist financing (AML/CTF) supervisor of businesses carrying out certain cryptoasset activities in the UK on 10 January 2020.
The authority detailed: “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.”
Noting that cryptoassets are ‘highly speculative’ and prone to losing value quickly, the FCA does not maintain consumer protection powers for the cryptoassets of firms, even if said companies are registered with the FCA,
Consumers are ‘unlikely’ to be able to access the Financial Ombudsman or Financial Services compensation scheme, regardless of whether a cryptoasset firm is temporarily or permanently registered with the FCA.
The authority maintains that it does not hold responsibility for ensuring that cryptoasset businesses protect the assets of their clients, stating that ‘if customers invest in cryptoassets, they should be prepared to lose all their money’.