A number of crypto service providers operating in the UK may be forced to temporarily close their businesses because they have not yet been fully approved by the regulator.
The Financial Conduct Authority (FCA) has set a deadline of March 31 for all crypto asset businesses to be fully registered.
However, according to a Bloomberg report, 12 companies are still on the temporary register and will have to suspend their services if they do not secure fully approved status by the end of the month.
The companies include a number of digital banking apps, including Revolut, as well as crypto custodian Copper.
So far just 33 companies have been fully registered by the FCA. More than 80% of firms that have sought regulatory approval have either withdrawn their application or been rejected by the regulator. Six companies were removed from the temporary register last week including crypto market maker B2C2.
The regulator may choose to extend the current deadline. However, the situation has sparked concern that rather than wait for an extension or appeal their rejection, many of these companies will seek to relocate to another jurisdiction more accommodating of their business model and from where they can still service UK customers.
Copper, which has over 150 employees based in London and is seeking a $3 billion valuation, recently partnered with State Street to develop a crypto custody service.
According to Bloomberg, it is looking to gain regulatory approval in Switzerland as an alternative option while continuing to pursue registration in the UK.
Crypto trading firm Binance withdrew its application last year after the FCA declared that it was “not capable” of effectively servicing the company under its current structure.
The FCA’s approach has led to criticism from some quarters that the UK is in danger of falling behind other EU states in terms of laying out clear regulations for the crypto market.
Former UK chancellor Philip Hammond, also a senior adviser with Copper, called the situation “quite shocking” and said the UK may face a loss of talent and status.
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