UK Regulator Reports 87% of Crypto Firms Fail to Meet Registration Standards

The UK Financial Conduct Authority (FCA) has raised alarms over the state of the cryptocurrency sector, revealing that a staggering 87% of crypto firms have failed to meet registration requirements. This warning comes as part of the regulator’s broader efforts to strengthen consumer protection, combat fraud, and ensure regulatory compliance in an industry notorious for its volatility.

FCA Tightens Crypto Regulations to Protect Consumers

In its 2023-2024 Annual Report, the FCA outlined its progress in enhancing oversight of the crypto market. The report brought attention to the regulator’s struggle to ensure that firms in the crypto space align with UK laws, particularly those related to anti-money laundering (AML) protocols.

According to the report, over 87% of crypto registration applications were either rejected, withdrawn, or refused. This significant statistic illustrates the challenges the FCA faces in trying to create a safe environment for consumers amid a landscape rife with fraud and other financial crimes.

The FCA said its objective is to guide firms in understanding what is expected. “We help firms applying for authorization by communicating our expectations and issuing guidance on good and poor practice,” noted the report. As of 2024, only 44 crypto firms had successfully registered under the UK’s money laundering regulations, highlighting a stringent vetting process designed to safeguard financial stability.

New Marketing Rules for Cryptoassets in 2024

To further protect investors, the FCA has rolled out a set of stricter marketing regulations for crypto assets, effective from early 2024. These rules introduce measures such as a mandatory 24-hour cooling-off period for investors, preventing impulsive, high-risk decisions. Additionally, crypto assets have been categorized as “Restricted Mass Market Investments,” meaning they must adhere to strict marketing standards.

The FCA emphasized the need for clear, fair, and non-misleading promotions, stating: “Crypto promotions must now be transparent and provide sufficient information so that consumers are fully aware of the risks involved.” To enforce these regulations, the FCA issued 450 consumer alerts during the first quarter of 2024, targeting firms that were illegally promoting crypto investments without proper authorization.

International Cooperation and Continued Oversight

The FCA’s report also emphasized its broader commitment to combatting financial crime across sectors, with a particular focus on high-risk industries like cryptocurrency. Since April 2023, the regulator has conducted multiple supervisory visits to crypto firms, enforcing stricter controls to mitigate risks related to fraud and money laundering. The FCA remains firm in its stance on promoting greater transparency and accountability within the financial sector.

The report further underscored the importance of international collaboration, noting the FCA’s ongoing efforts to shape global standards on cryptocurrency regulation. “We continue to play a leading role internationally, working to set standards in areas such as crypto, sustainability, and non-bank finance,” the report stated.

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