The Financial Conduct Authority (FCA) has taken the decision to extend the temporary licensing programme for 12 digital currency firms, in spite of significant pressure from the country’s UK government.
According to a report by the Financial Times – 12 companies will be able to continue operating on a temporary basis, with the digital banking specialist Revolut amongst the firms that will continue under the licence.
Nonetheless, the move has already been met with criticism from governance in the UK, with Mel Stride MP, chair of the Treasury select committee, stating: “It is disappointing to hear that the FCA hasn’t fully met its own already-extended deadline, which the committee strongly encouraged it to meet. I look forward to receiving a full explanation for the delay.”
It underlines the significant challenge involved with providing a regulatory framework for the digital currency sector – marking another delay in the licensing process.
Prior to the latest delay, Ian Taylor, Executive Director at CryptoUK, the UK’s independent crypto industry association, underlined that an unprecedented 80% of the rest, that is 160 out of 200 British crypto companies, had been asked to withdraw.
He added: “The impact for those companies is that they will have to operate off-shore. This means that there will be no consumer oversight if a UK citizen buys products from an online business domiciled in Malta, for example as they may still sell their services into the UK.
“Consumers will therefore have no recourse from the regulator, as the firm will operate outside the UK jurisdiction, which is bad for British consumer protection. This will also result in thousands of job losses at all of those 160 British crypto companies.
“This could also have another negative effect, in terms of illicit finance and sanctions avoidance. If the companies withdraw and move to less advanced regulatory environments, they will not be required to conduct globally accepted standards with regard to AML, KYC and transaction monitoring.”
Expert Analysis: The U-turn by the FCA indicates just how tricky it is to provide a stringent yet accessible regulatory framework for digital currency, however, it will be seen as a relief for the firms granted a temporary licence.