The City watchdog has extended a temporary regime to allow cryptoasset firms to continue trading while it considers their registration applications.
The Financial Conduct Authority (FCA) has extended the end date for the Temporary Registration Regime (TRR), which it first introduced in December, from 9 July 2021 to 31 March 2022.
Under TRR, existing cryptoasset firms that applied for registration before 16 December 2020, and whose applications are still being assessed, are allowed to continue trading.
“A significantly high number of businesses are not meeting the required standards under the money laundering regulations resulting in an unprecedented number of businesses withdrawing their applications,” the FCA said. “The extended date allows cryptoasset firms to continue to carry on business whilst the FCA continues with the robust assessment being undertaken.”
The FCA’s anti-money laundering legislation is aimed at preventing the transfer and disguise of funds from criminal activity, or funding of terrorist groups. It will only register firms where it is confident that processes are in place to identify and prevent this activity.
The City regulator warned that cryptoassets are considered very high risk, speculative investments so if consumers invest in them they should be prepared to lose all their money.
The FCA said that it does not have consumer protection powers for the cryptoasset activities of firms. Even if a firm is registered with the FCA, it is not responsible for ensuring cryptoasset businesses protect client assets (ie customers’ money), among other things.
The FCA also said that it is unlikely that consumers will have access to the Financial Ombudsman Service or Financial Services Compensation Scheme, irrespective of whether a firm has temporary or full registration.