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LONDON – A “significantly high” number of cryptocurrency companies are failing UK money laundering prevention requirements, the country’s financial services regulator warned.
Companies that offer crypto-related services must register with the Financial Conduct Authority. The regulator has put in place a temporary licensing system for companies whose applications have not yet been approved to allow them to continue trading.
The FCA announced on Thursday that it had postponed the deadline for the so-called temporary registration regime from July 9, 2021 to March 31, 2022.
“A significant number of companies are not meeting the required standards under anti-money laundering regulations, leading to an unprecedented number of companies withdrawing their applications,” the FCA said in a statement.
“The extended date allows cryptoasset firms to continue doing business while the FCA continues its robust valuation.”
Currently, only five crypto companies are registered with the FCA. These include Tyler and Cameron Winklevoss Gemini and the British start-up Ziglu. There are dozens of applicants on the list of Temporary Registration Systems.
Cryptocurrencies like Bitcoin have long been haunted by concerns about their use in illegal activities such as money laundering and cyberattacks. That’s because the people who do them don’t reveal their identities. Officials have also warned of the speculative nature of crypto assets.
In January, the FCA issued a sharp warning to cryptocurrency investors.
“Investing in crypto assets or related investments and lending generally involves very high risks with investors’ money,” the regulator said.
“When consumers invest in such products, they should be ready to lose all their money.”
The FCA reiterated its stance on Thursday, warning that many cryptocurrencies are “highly speculative and can therefore quickly depreciate”.
Bank of England Governor Andrew Bailey, who previously served as FCA chairman, made a similar statement last month. Cryptocurrencies “have no intrinsic value,” he said, adding, “only buy them when you’re ready to lose all of your money.”