The UK Financial Conduct Authority announced the extension of the Temporary Registrations Regime (TRR) for existing cryptoasset businesses to 31 March 2022.
The regime was put in place last year to allow cryptoasset firms that applied for registration before 16 December 2020 to continue trading while their applications are being assessed.
The UK watchdog discovered that a large number of businesses are not meeting the standards, required under the Money Laundering Regulations. The FCA reported that this has led to an unprecedented number of businesses withdrawing their applications.
The new extended date allows those firms to carry on with their business operations while the regulator proceeds with its assessment.
Anti-money laundering and counter terrorist financing legislation are designed to protect against the transfer and disguise of funds from criminal activity, or funding of terrorist groups.
The FCA stated in the official announcement:
While this is not the only element that the FCA will assess in relation to an applicant, the FCA will only register firms where it is confident that processes are in place to identify and prevent this activity.
The UK watchdog noted that many crypto assets are highly speculative and therefore volatile. They can lose their value quickly and the FCA does not have powers to cover cryptoasset activities of firms. The regulator reminded that a registration with the FCA does guarantee customer money protection.
The FCA said:
Cryptoassets are considered very high risk, speculative investments. If consumers invest in cryptoassets, they should be prepared to lose all their money.
It is unlikely that consumers will have access to the Financial Ombudsman Service or Financial Services Compensation Scheme, irrespective of whether a firm has temporary or full registration.
