The FCA is defending its stringent crypto firm registration process despite concerns that the approach may hinder innovation.
The U.K. Financial Conduct Authority is reaffirming its commitment to a rigorous registration process for crypto businesses, addressing concerns that these tough standards could hinder innovation in the industry.
In a blog post on Oct. 21, Val Smith, head of payments and digital assets at the FCA, defended the agency’s stance, asserting that the FCA’s experts “never turn applications down out of hand.”
“We know that setting and maintaining standards people can trust is a key part of any thriving, competitive sector. That’s why we hold all firms seeking registration, not just crypto firms, to strong and universal standards.”
Val Smith
Smith addressed concerns over the potential for illicit activities, highlighting the risks of terrorism, organized crime, and human trafficking. She cautioned against any relaxation of standards, suggesting it could initiate a “race to the bottom” in regulatory practices.
Regarding evaluation processes, the FCA official explained that the regulator looks at a firm’s internal controls as well as its overall operations and the people managing it.
“Our decision on whether to register isn’t just based on the controls and systems firms have in place. We look at the environment they operate in, the people involved in these processes and the customers they want to reach.”
Val Smith
Smith’s defense of the FCA’s regulatory framework comes a few months after the FCA unveiled its annual report, revealing that out of 35 crypto applications received in the year ending March, only four firms were approved. The statistic indicates that over 87% of crypto registration attempts were either rejected, withdrawn, or denied, underscoring the challenges facing new entrants in the U.K. crypto market.
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