FCA Formalises Pre-Application Support For Digital Asset Firms

The U.K.'s Financial Conduct Authority (FCA) has, on 31 January 2024, formalised its pre-application support for digital asset firms that want to provide services that come within the scope of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (Regulations). Firms required to register with the FCA under the Regulations are cryptoasset exchange providers and custodian wallet providers that seek to provide services by way of business and intend to act in the course of business in the U.K.

Background

Historically, success rates for firms seeking to register have not been high. According to data published by the FCA, since January 2020 71% of applicants withdrew their applications, 11% were rejected (meaning that the minimum information sought was not provided) and 4% were refused (meaning that the FCA found that the application did not meet the standard for registration).