Recently, the United Kingdom crypto regulator, the FCA (Financial Conduct Authority), published a report commissioned by the Treasury committee. According to the report, about 85% of crypto exchanges applying for licenses did not meet minimum requirements.
The document state that most crypto firms did not comply with counter-terrorist finance and AML (anti-money laundering) requirement.
FCA Report Uncovers Gross Misconduct Among Crypto Firms
The UK does not have a formal regulatory system for digital currencies. Notwithstanding, the FCA has urged crypto entities to enroll in the country’s AML system so they can keep operating.
At a recent meeting, FCA complained that only 5% of the crypto license applications from crypto firms passed its first assessment process. The agency argued that most applications are of “poor standard.”
The regulator added that some firms were linked to organized or financial crimes. Hence, it referred such companies to the appropriate authorities.
In addition, the report said that some personnel in these exchanges did not have the appropriate experience, skills, and knowledge to perform their roles and minimize risks. Harriett Baldwin, a member of the Treasury Committee, said, “the ongoing investigation into crypto regulation has not changed our perception that certain aspects of this industry resemble a ‘Wild West.'”
Notably, crypto entities in the UK have experienced a tough relationship with the FCA over the years. The FCA Since taking responsibility for regulating crypto in the UK in 2020, many industry players have argued that the agency has been very harsh towards the crypto sector.
The FCA implemented strict regulations on crypto operations, including prohibiting certain services. As a result, the regulator fined several crypto firms heavily for non-compliance with its regulations.
Crypto Firms Fail To Abide By Regulations
Furthermore, the FCA has come under fire for being slow to crypto regulation. Crypto players have complained that the agency needs to clarify its crypto regulations.
The FCA’s actions have driven most crypto companies to other jurisdictions with favorable and clearer regulations. Notwithstanding, the crypto regulator has stated that it is open to innovation and will collaborate with crypto entities to establish appropriate regulations.
Meanwhile, regulators continue to slap several crypto companies with heavy fines over non-compliance with AML and KYC policies. In March 2021, the US CFTC (Commodities and Futures Trading Commission) fined Coinbase, a crypto exchange, $6.5 million for non-compliance. Also, the latest FTX crash, which is still negatively affecting the crypto industry, has spurred regulators to adopt stricter regulatory measures.
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