Crypto firms are facing increasing challenges in the UK due to burdensome and time-consuming regulatory processes. According to the Financial Times, registrations for crypto asset exchanges and custodian wallet providers with the Financial Conduct Authority (FCA) have decreased by more than 50% in the past three years. This decline highlights the growing frustration within the industry regarding the regulatory environment in the UK.
The average approval time for crypto registration applications with the FCA is 459 days, with some firms waiting over two years for a decision. This lengthy process has led to a growing exodus of crypto businesses seeking more efficient regulatory environments abroad. Since 2020, the FCA has only approved around 15% of the applications it has processed, leading many to question the effectiveness of the regulatory framework in the UK.
Critics argue that the stringent criteria and rigorous scrutiny imposed by the FCA are making the UK an unattractive destination for crypto firms. The lack of flexibility and adaptability in the regulatory framework is stifling innovation and driving companies to seek more crypto-friendly jurisdictions. This trend poses a threat to the UK’s ambitions of becoming a global hub for digital assets, as more and more companies are looking elsewhere to operate.
A Freedom of Information (FOI) request by law firm Reed Smith revealed that 186 firms had withdrawn their applications over the past three years. While the number of withdrawals decreased by 78% in the last year, the overall trend showcases the challenges posed by the FCA’s regulatory approach. The growing frustration within the industry suggests that significant reforms are needed to prevent the UK from losing its competitive edge in the global crypto market.
The UK’s regulatory hurdles are driving crypto firms away, leading to a decline in registrations and approvals. The slow and complex processes, coupled with outdated regulations, are forcing companies to seek more accommodating regulatory environments abroad. Without significant reforms, the UK risks losing its position as a global hub for digital assets and falling behind in the rapidly evolving crypto market.
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