The UK’s financial watchdog, the Financial Conduct Authority (FCA), has come under fire for the slow pace of its authorisation process for fintechs.

The FCA’s top executives were appearing before a Treasury Select Committee involving a cross-party selection of MPs.

The politicians accused the regulator of spending up to a year to authorise new firms and disproportionately regulating small startups in the same way as large multinational companies.

In response, FCA chief executive Nikhil Rathi said that the regulator plans to recruit 100 employees to address a backlog in applications and intends to make the process more digital. But he also added that the sheer number and diversity of new fintech-led business applying for authorisation creates a challenge.

“We have to choose our themes, there's a limit to how many unfettered new ideas we can sponsor through at any one time,” said Rathi.

A particular challenge is the rapidly growing area of digital assets and cryptocurrency. Rathi said that around 90% of applications are either withdrawn or refused. He also reiterated a warning about the risky nature of certain crypto products.

“Some of these crypto assets we do not believe have intrinsic value. They have been a vector for serious organised crime and money laundering and anyone invested in them must be ready to lose all their money,” said Rathi.

The FCA has though granted a licence to Fidelity Digital Assets for its digital asset custody and trade execution services. The business launched in Europe in 2019 and was previously listed as a temporary member on the FCA register before its recent move to the permanent register.

The watchdog also granted digital currency prime brokerage Genesis approval as a registered cryptoasset business.

Meanwhile the UK could be set for the arrival of another crypto exchange after Tokenise announced plans to launch a stock exchange for security tokens in Q1 2022.

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