At the start of the pandemic people wondered what the crisis would do to the crypto-asset market. As we left 2020, Bitcoin hit an all-time high and the crypto-asset world was moving into the mainstream and becoming subject to regulation around the world.
On 16 December 2020, the FCA announced that cryptocurrency businesses that have filed to register with the FCA may continue operating under a temporary licensing regime for six months as the regulator deals with a backlog of applications. Due to the coronavirus restrictions and the “complexity and standard of the applications” received, the FCA said it has not been able to assess and register all the firms that applied.
From 10 January 2020, the FCA became the anti-money laundering and counter terrorist financing (AML/CTF) supervisor for these types of firms, which includes firms that exchange money to and from cryptoassets and those that safeguard their customers’ cryptoassets. From this date, ‘existing cryptoasset businesses’ have had 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.
The new temporary registration regime is for existing cryptoasset businesses which have applied for registration before 16 December 2020, and whose applications are still being assessed. This is 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.
Firms that did not submit an application by 15 December 2020 will not be eligible for the temporary registration regime. They will need to return cryptoassets 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.