Crypto companies still awaiting U.K. regulatory approval are looking abroad with only three days until a government deadline, prompting industry concerns of an impending exodus and an unfair advantage awarded to those stationed overseas.
The Financial Conduct Authority currently plans to shutter its temporary registration regime for cryptoasset businesses on March 31, leaving some of the country’s biggest industry players in limbo. Twelve firms including crypto custodian Copper Technologies Ltd. and digital bank Revolut Ltd. remained on the temporary register as of Tuesday, and face having to suspend their services if they don’t gain approval before the deadline.
The FCA has taken a tough stance on crypto regulation as demand for digital assets among retail investors spiked significantly over the last two years, with only 33 firms achieving permanent registration with the body. Britain’s top financial authorities, including the Bank of England and the Treasury, have stepped up scrutiny over the sector in recent months, keeping a keen eye on banks and investment firms chasing the hype around Bitcoin and other tokens.
Six companies — including crypto market maker B2C2 Ltd. and crypto digital banking apps Wirex Ltd. and Trastra Ltd. — fell off the temporary register last week without gaining full authorization. While the FCA may yet extend its deadline after an earlier delay in June, some crypto companies have already started the process of moving their operations abroad to be able to continue servicing U.K. customers, targeting nearby European destinations such as Croatia and Switzerland.
One firm that disappeared from the register on March 25 was CoinBurp Ltd., a company which the FCA issued a consumer warning about in July last year. CoinBurp Chief Executive Peter Wood said in an email that it is subsequently not providing crypto services in the U.K., but it is “in the process of restoring this” shortly.
Meanwhile, B2C2 said all spot trading of cryptoassets is being handled by its U.S. entity after it withdrew its FCA application. A spokesperson for Wirex said it now plans to service U.K. customers from its Croatian subsidiary Wirex Digital, having exited the FCA’s process on March 25.
Among the most high-profile companies still exploring options abroad is Copper, a London-based crypto custodian and trading services provider with more than 150 employees. That firm — which counts former U.K. Chancellor of the Exchequer Philip Hammond as a senior adviser — is pursuing parallel plans to gain regulatory approval in Switzerland so that it has a second option, according to a person familiar with the matter. The person said Copper hasn’t gotten a verdict on whether it will receive full registration from the FCA yet.
Already, the intensive regulatory process is prompting some warnings from the industry that it will hamper the U.K.’s progress in crypto innovation. In a January interview, Hammond said it was “frankly quite shocking” that Britain has fallen behind other finance hubs such as the European Union in setting clear regulations for the crypto sector, warning that the U.K. may face a loss of talent and status in finance.