The U.K. Financial Watchdog, FCA, has reminded crypto-oriented businesses to register with them by June 30, 2020, so that the applications can be processed within the next six months.
According to the FCA, entities that haven't registered by then, will not be legally recognized come the Jan 2021 deadline.
The FCA does not register “any businesses that started carrying on business in the UK immediately before 10 January 2020 and are not registered by the FCA by the 10 January 2021 deadline will have to cease carrying on business.,” reads the FCA statement.
Following a spike in crypto-related crime, the FCA was tasked in regulating this space as the Fifth Anti-Money Laundering Directive (5AMLD) came into action at the beginning of the year. This move is expected to reduce financial crime such as money laundering and terror financing, which appear to have found new avenues in crypto ecosystems. The call for registration is, therefore, no surprise to crypto firms operating within the U.K.
Notably, firms that previously operated in the FinTech space under U.K.'s Financial Services and Market Acts 2000, but have now scaled to crypto services, will be required to undertake a new registration. According to the U.K. regulator, this approach will help them in proactive supervision of crypto businesses:
“The FCA will proactively supervise firms” compliance with the new regulations, and will take swift action where firms fall short of desired standards.”
The 5AMLD & FATF Oversight Frameworks
To effectively regulate the crypto space, FCA will rely on the 5AMLD and FATF's ‘travel rule‘ as underlying regulatory frameworks. With both in play, crypto entities will be required to provide information such as future projections, governance, employees, customers, and business objectives, amongst others.
Also, the FATF travel rule provides that crypto exchanges should share client information upon request when executing B2B transactions. This initiative affects around 39 countries, including China, which are expected to have complied upon a revisit by the FATF.