Nine in 10 crypto firms 'rejected' by FCA

Around 90 per cent of cryptoasset companies that applied for registration under money laundering regulations in the first year since FCA authorisation became mandatory have been rejected, according to TMT Analysis.

The company says that figures provided by the regulator show that only 12 per cent of crypto firms were approved in the first 12 months since authorisation was made a requirement.

Only 30 firms were approved amongst 250 overall applications during the 52 weeks to 10 January 2022, it said.

“Crypto firms are facing a difficult task to build credibility and convince regulators of their robust security measures – to win hearts and minds at the FCA, crypto firms need to tackle security risks and showcase more stringent anti-fraud measures,” said Fergal Parkinson, director of TMT Analysis. “Exchanges and providers need to increase security measures to attract investors and allow crypto to fulfil its potential as a truly viable, global alternative to the current monetary system.

"Changing consumer perceptions over crypto security is the single biggest barrier to mass adoption.”

The figures come after the Bank for International Settlements (BIS) said that the collapse of many stablecoins and DeFi lending platforms had revealed the difficulty in assessing their risks, largely because most data on asset backing, trading volumes, and market capitalisation is self-reported by unregulated firms.

During a panel discussion at Money 20/20 in Amsterdam earlier this month, the head of FinTech partnerships at HSBC Rita Martins warned that without regulation DeFi would be “really risky”.

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