Over 60 crypto firms prepared to exit the UK as FCA application withdrawals skyrocket

• Crypto firms are prepared to exit the United Kingdom as 64 companies have withdrawn their applications to conduct business.
• The FCA required digital asset firms to register with the regulator prior to operating in the country since January.
• Slow application approvals have led to many firms retracting their applications with the FCA.

Over 60 cryptocurrency firms have withdrawn their applications with the Financial Conduct Authority (FCA) to do business in the United Kingdom while the country continues to tighten crypto regulations. 

FCA cracks down on crypto while retail demand rises

Registration data from the FCA showed that about 64 crypto-related companies had withdrawn their applications, up by 51 in early June. Since these firms have retracted their applications, they will not be allowed to operate in the country.

Starting in January, firms that were conducting business in cryptocurrencies have been required to register with the regulatory body prior to operating. Due to the immense volume, the regulator extended the temporary registration regime for digital asset firms. 

Since early June, FCA noted that over 100 crypto-related firms are still unregistered. The approval process has been prolonged, and out of the numerous submitted applications, the British regulator only gave the green light to six firms, including Gemini and Arca. 

Dozens of other companies are still being assessed while not yet considered to be “fit and proper,” according to the watchdog. The regulator is increasing the temporary relief to crypto companies until March 2022. 

The FCA is beginning to show hostility toward cryptocurrency firms, issuing a warning against leading crypto exchanges last week. The financial watchdog stated that the major digital asset exchange platform Binance is illegally operating in the country.

Binance withdrew its registration application with the FCA in mid-May, which may have led to the issuance of the recent warning. A Binance spokesperson said that the firm is working closely with the British regulator to increase the security and sustainability of the industry. 

While the country attempts to clamp down further on the new asset class, the head of enforcement at the FCA noted that 111 unregistered crypto firms have been operating in the country. This comes at a time when the demand for digital assets is on the rise, as the number of adults holding cryptocurrencies in the country has reached 2.3 million.

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