The Financial Conduct Authority (FCA) in the United Kingdom takes more than a year to process registration applications for crypto asset exchanges or custodian wallet providers, as revealed by law firm Reed Smith’s analysis of average wait times over the past three years. The number of new applications has dwindled after several withdrawals.
Reed Smith requested three years’ worth of data through a Freedom of Information inquiry to investigate the FCA’s activities, as reported by the Financial Times. The processing of a crypto company registration has taken an average of 459 days over the past three years, with the agency dedicating 25 years of manpower to these applications. Despite efforts to expedite the process, the prolonged wait poses challenges to the UK’s goal of becoming a crypto hub, according to Brett Hillis, a partner at Reed Smith.
Although the FCA has faced criticism for its slow registration process, it has not been inactive in the crypto sphere. The agency has issued application extensions and provided repeated guidance since the implementation of new rules for promoting crypto assets in October 2023. The FCA has enforced these rules rigorously, although concerns have been raised about the agency’s enforcement capabilities due to a potential shortage of qualified staff.
The number of crypto companies applying for registration with the FCA is decreasing, with only seven applicants in the first quarter of 2024 and a total of 29 applications submitted between May 2023 and April 2024. This marks a significant decline compared to previous years, with 186 applications withdrawn within the three-year period. Hillis noted that while the decrease in applications may indicate better understanding of regulatory expectations among companies, it also raises concerns about London’s competitiveness if companies start looking to foreign jurisdictions.
As the number of registration applications to the FCA dwindles, concerns arise about London’s status as a competitive hub for crypto companies. Despite efforts to streamline the registration process and provide guidance, the agency faces challenges in attracting and retaining crypto businesses.
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