Less than one in seven cryptocurrency companies that attempted to register with the city watchdog were approved after high money laundering risks were detected.
Only 47 firms successfully registered between January 2020 and April this year, Financial Conduct Authority (FCA) figures show.
Of 344 applications received by the FCA, 233 were withdrawn and 48 rejected, while 16 were still pending at the time the figures were compiled.
The Treasury’s latest annual report on efforts to tackle money laundering and terrorist financing said the FCA carried out “robust” assessments when firms first registered, which “identified significant weaknesses” in money laundering controls. money.
This resulted in “a large number of firms withdrawing their applications or being refused or refused by the FCA”.
Crime fears: Only 47 cryptocurrency companies successfully registered between January 2020 and April this year, Financial Conduct Authority figures show
The data underlines the regulator’s high level of allowing companies that provide services such as consumer trading in digital currencies such as Bitcoin.
Companies that have received the green light include trading platform eToro, Bitstamp and Revolut.
But the figures also appear to deal a blow to the government’s hopes of making the UK a global hub for cryptocurrencies.
The FCA has been the anti-money laundering “overseer” for crypto asset firms operating in the UK since early 2020.
It is the latest example of the watchdog’s cautious approach towards the crypto industry, which has run into friction with ministers.
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The watchdog’s former chairman, Charles Randell, previously warned that investors could be harmed if crypto assets were labeled as regular investments, effectively bringing them into the mainstream even though, he said, fraud is a “feature, not a mistake” in much of the industry. .
But City Minister Bim Afolami said at a recent crypto conference that Randell was “completely wrong.”
He described the comments as “arrogant” and “dangerous”, adding: “The government’s job is to give as many opportunities as possible for ordinary people to have a stake in their society and their economy.” “Cryptocurrencies are a key part of that.”
Afolami said, however, that while he had not “agreed with each and every FCA decision in general terms, they are working with us.”