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Crypto Firms Face an Uncertain Future in the UK. Now a Key Deadline Has Been Extended

Chris Ratcliffe | Bloomberg | Getty Images
  • A select few firms, including Revolut and Copper, will be allowed to continue trading after a temporary register closes Friday, the FCA said.
  • The temporary register has shrunk considerably in recent weeks, with B2C2 and Wirex among those withdrawing their applications.
  • The deadline extension comes as British officials are set to announce a new regulatory regime for crypto as soon as next week.

The U.K.'s Financial Conduct Authority said Wednesday it is giving some crypto companies more time to register with the regulator beyond an original Mar. 31 deadline.

A select few firms, including the fintech company Revolut and crypto start-up Copper, will be allowed to continue trading after a temporary registration regime closes, the FCA said in an update on its website.

Copper counts the former U.K. finance minister, Philip Hammond, as an advisor.

The temporary register closes on Friday "for all but for a small number of firms where it is strictly necessary to continue to have temporary registration," the FCA said.

"This is necessary where a firm may be pursuing an appeal or may have particular winding-down circumstances."

Crypto firms operating in the U.K. are required to be registered with the FCA under money laundering regulations. But several companies have yet to make the cut. The FCA set up a temporary register to allow firms to continue trading while they sought full authorization.

The list of firms on the temporary register has shrunk considerably in recent weeks, with market maker B2C2 and trading app Wirex among the firms withdrawing their applications.

B2C2 is shifting its spot trading operations to a U.S. entity, while Wirex plans to offer crypto services to Brits from a Croatian subsidiary.

Now, just 12 businesses remain on the temporary regime, including Revolut, Copper and crypto wallet platform Blockchain.com.

Crime 'red flags' missed

Paysafe, a fintech firm that is on the FCA's full register, said it welcomes "heightened regulatory oversight" of the crypto industry.

"The U.K.'s registration regime will mean that a number of companies will inevitably need to exit the U.K. market because they are unable to meet the necessary standards in terms of risk and compliance," Chirag Patel, CEO of Paysafe's digital wallets division, said via email.

Still, there's been a backlash from the crypto industry over the FCA's handling of the registration process. Industry insiders previously told CNBC the regulator is understaffed and has been slow to approve applications.

For its part, the FCA says a "high number" of crypto firms aren't meeting the required anti-money laundering standards. Just 33 companies have made it onto the full register so far.

"While we have registered 33 firms, we have seen too many financial crime red flags missed by the cryptoasset businesses seeking registration," an FCA spokesperson said via email. "Worse, we have seen examples where firms do not have the controls necessary to raise red flags in the first place."

The watchdog's deadline extension comes as British officials are set to announce a new regulatory regime for crypto as soon as next week, according to CNBC sources. The Treasury department declined to comment when asked about the plans.

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