Many cryptocurrency firms are not meeting money laundering rules, UK watchdog warns
- The U.K. Financial Conduct Authority warned that a "significantly high" number of cryptocurrency firms are failing to meet U.K. money laundering rules.
- The FCA said this has resulted in an "unprecedented number" of crypto firms withdrawing applications to register with the regulator.
- It has pushed back the deadline for a temporary licensing regime for crypto companies from July 9, 2021, to March 31, 2022.
LONDON — A "significantly high" number of cryptocurrency firms are failing to meet U.K. requirements on preventing money laundering, the country's financial services watchdog has warned.
Businesses offering crypto-related services are required to register with the Financial Conduct Authority. The regulator introduced a temporary licensing regime for firms whose applications haven't yet been approved to allow them to continue trading.
The FCA said Thursday that it had pushed back the deadline for the so-called Temporary Registration Regime from July 9, 2021, to March 31, 2022.
"A significantly high number of businesses are not meeting the required standards under the Money Laundering Regulations resulting in an unprecedented number of businesses withdrawing their applications," the FCA said in a statement.
"The extended date allows cryptoasset firms to continue to carry on business whilst the FCA continues with the robust assessment being undertaken."
Just five crypto companies are currently registered with the FCA. Those include Tyler and Cameron Winklevoss' Gemini and British start-up Ziglu. There are dozens of applicants sitting on the Temporary Registration Regime list.
Cryptocurrencies like bitcoin have long been dogged by worries over their use in illegal activities like money laundering and cyberattacks. That's because the people transacting them don't reveal their identity. Officials have also warned about the speculative nature of crypto assets.
In January, the FCA issued a stark warning to cryptocurrency investors.
"Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors' money," the regulator said.
"If consumers invest in these types of product, they should be prepared to lose all their money."
The FCA reiterated its stance Thursday, warning that many cryptocurrencies are "highly speculative and can therefore lose value quickly."
Bank of England Governor Andrew Bailey — who was previously chief executive of the FCA — last month gave a similar statement. Cryptocurrencies "have no intrinsic value," he said, adding: "Buy them only if you're prepared to lose all your money."
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