FCA establishes temporary new regime for crypto asset businesses
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FCA establishes temporary new regime for crypto asset businesses 18 December 2020UK Reporter: Maddie Saghir
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The Financial Conduct Authority (FCA) has established a Temporary Registration Regime to allow existing crypto asset firms, who have applied to be registered with the FCA, to continue trading.
The FCA is advising customers of crypto asset firms, which should have applied to the FCA but have not done so, to withdraw their crypto assets or money before 10 January 2021.
From 10 January 2020, the FCA became the anti-money laundering (AML) and counter-terrorist financing (CTF) supervisor for these types of firms, which includes firms that exchange money to and from crypto assets and those that safeguard their customers’ crypto assets.
From this date, ‘existing crypto asset businesses’ were required to comply with the Money Laundering Regulations; such firms were required to be registered with the FCA by 10 January 2021.
New businesses who began operating after 10 January 2020, are required to obtain full registration with the FCA before conducting business, explained the authority.
Meanwhile, the Temporary Registration Regime is for existing crypto asset businesses which have applied for registration before 16 December 2020, and whose applications are still being assessed.
This is set to enable those existing businesses to continue to trade after 9 January 2021 until 9 July 2021, pending the FCA’s determination of their application.
The FCA was not able to assess and register all firms that have applied for registration, due to the complexity and standard of the applications received, and the pandemic restricting the FCA’s ability to visit firms as planned.
Firms that did not submit an application by 15 December 2020 will not be eligible for the temporary registration regime.
The FCA said firms will need to return crypto assets to customers and stop trading by 10 January 2021. Firms that do not stop trading by that date are at risk of being subject to the FCA’s criminal and civil enforcement powers.
It has advised consumers who deal with crypto asset firms to check if the firm they use is on the FCA’s Register or list of firms with Temporary Registration.
If they are not, the FCA said they should check whether they are entitled to carry on business without being registered with the FCA.
It was noted that this may apply if they are registered in a different country.
If the firm is not entitled to carry on business, then consumers should withdraw their crypto assets and/or money before 10 January 2021. This is because the firm will be operating illegally if it does not cease trading from 10 January 2021, explained the authority.
“Many crypto assets are highly speculative and can therefore lose value quickly. The FCA does not have consumer protection powers for the crypto asset activities of firms. Even if a firm is registered with the FCA, it is not responsible for ensuring crypto asset businesses protect client assets (i.e customers’ money), among other things,'' commented the FCA.
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