FCA allows 'small number' of crypto firms to trade after deadline

FCA allows 'small number' of crypto firms to trade after deadline

The Financial Conduct Authority has allowed a number of cryptocurrency firms to trade past a temporary licensing deadline as it continues to assess their applications.

A temporary registration regime (TRR) was introduced last year to allow cryptocurrency firms to continue trading while they were in the process of applying for registration with the FCA.

The FCA said it has concluded its assessments and the TRR will close today (April 1), except for a “small number” of firms where it is “strictly necessary” to continue to have temporary registration.

In a statement, the regulator said: “This is necessary where a firm may be pursuing an appeal or may have particular winding-down circumstances.”

Twelve crypto asset companies are included on the regulator’s list of those with temporary registration, including Copper and Revolut.

Temporary registrations

Although investment in cryptoassets is not a regulated activity, certain cryptoasset companies have been subject to money laundering regulations since 2020, which means these firms must be registered with the FCA before conducting business.

The TRR was introduced to allow companies which had applied for registration before December 16 2020 to continue trading as their applications were considered.

At the time, the regulator said this was due to the complexity and standard of the applications received, and the pandemic restricting the FCA’s ability to visit the companies. 

The regime was due to end in July last year, meaning firms did not have to cease trading if they had not received FCA permission, however that deadline was extended to today (March 31).

Pressure growing

Pressure has been growing on the FCA to tighten regulation of crypto firms, amid worsening levels of scams and fraud.

The number cryptoasset scam reports received by the FCA more than doubled to 6,372 in 2021.

In October, the Bank of England called for new regulations around cryptocurrencies as a “matter of urgency”, warning of the risks posed by the digital asset to retail investors.

A few months earlier, FTAdviser reported that the regulator had warned consumers against holding cryptoassets after it reported a rise in ownership of the assets.