UK watchdog rejects criticism over crypto authorizations

LONDON, Sept 29 (Reuters) – Crypto companies were undeterred by the initial failure to obtain licenses to operate in Britain and submitted new applications, the Financial Conduct Authority said on Thursday.

The FCA has been criticized by lawmakers and the crypto sector for being slow to process license applications and for rejecting some applicants despite the UK government’s push to make London a global crypto hub.

“It’s no surprise that I’m still seeing a lot of crypto firms still seeking to get licenses here in the UK, even though some have been refused those licenses on the first pass,” FCA executive director of competition and consumers Sheldon Mills said at a City & Financial- conference.

“They know we have a good regulatory system and if they meet our standards, that’s important to every jurisdiction that they’re looking to apply for around the world,” Mills said.

“This is a benefit for the UK economy and the UK financial services industry, and is good for competition, investment and growth.”

Crypto firms are being scrutinized by the FCA for their ability to stop their operations being used for money laundering or terrorist financing.

In March, the FCA said that 90% of crypto firms seeking approval for their anti-money laundering controls have either withdrawn their applications or been rejected because they could not meet the standards. read more

Mills said 95 people have been hired for the watchdog’s authorization team and the pending caseload has fallen by 40%.

“Over time, we expect that faster, better decisions will support us in bringing down the costs of the regulatory system,” Mills said.

Jean-Marie Mognetti, CEO of crypto-asset manager CoinShares, said the company chose to list in EU member state Sweden because the UK and the FCA were “not very keen” on seeing any crypto companies in London.

Mognetti said the EU’s new set of ‘MiCA’ rules for fully licensing crypto firms will give the EU an advantage over the UK.

“If you are talking about attractiveness from a regulated activity [perspective]the fact that London is not part of MiCA and will not have passports in Europe… is going to be a huge handicap,” Mognetti said.

Under a bill now before parliament, the UK will license stablecoins but leave the rest of the crypto-asset industry for a later date.

Reporting by Huw Jones Editing by Alexandra Hudson

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