UK regulator reports 87% of crypto companies fail to meet registration criteria
Financial Conduct Authority (FCA) (FCA) A warning has been raised about the state of the cryptocurrency sector, revealing that a whopping 87% of cryptocurrency companies are failing to meet registration requirements. The warning comes as part of a broader effort by regulators to strengthen consumer protection, combat fraud, and ensure compliance in an industry notorious for its volatility.
FCA Strengthens Cryptocurrency Regulations to Protect Consumers
The FCA outlined its progress on strengthening oversight of the cryptocurrency market in its 2023-2024 Annual Report, which highlighted the regulator’s challenges in ensuring that crypto businesses comply with UK law, particularly those related to anti-money laundering (AML) protocols.
According to the report, more than 87% of cryptocurrency registration applications were rejected, withdrawn or denied. This important statistic shows that the FCA is facing the challenge of creating a safe environment for consumers in an environment where fraud and other financial crimes are rampant.
The FCA said it aims to guide companies to understand what is expected of them. “We help companies applying for authorisation by communicating expectations and issuing guidance on good and bad practice,” the report said. As of 2024, only 44 cryptocurrency companies have successfully registered under UK money laundering regulations, highlighting the rigorous vetting process designed to protect financial stability.
New Marketing Rules for Crypto Assets in 2024
To further protect investors, the FCA has introduced stricter marketing regulations for crypto assets, which will apply from early 2024. These rules introduce measures such as a mandatory 24-hour cooling-off period for investors to prevent impulsive and risky decisions. Crypto assets are also classified as “restricted mass market investments” and must adhere to strict marketing standards.
The FCA stressed the need for clear, fair and non-misleading advertising, stating that “Cryptocurrency advertising must now be transparent and provide sufficient information to ensure that consumers are fully aware of the associated risks.” To enforce these regulations, the FCA issued 450 consumer warnings in the first quarter of 2024, targeting companies that were illegally advertising cryptocurrency investments without proper authorization.
International cooperation and ongoing supervision
The FCA report also highlighted its broad commitment to combating financial crime across the sector, with a particular focus on high-risk industries such as cryptocurrencies. Since April 2023, the regulator has conducted a number of supervisory visits to cryptocurrency companies, implementing stricter controls to mitigate risks related to fraud and money laundering. The FCA remains committed to promoting greater transparency and accountability within the financial sector.
The report also highlighted the importance of international cooperation, noting the FCA’s ongoing efforts to shape global standards for cryptocurrency regulation. “We continue to play a leading role internationally as we work to set standards in areas such as cryptocurrencies, sustainability, and non-bank finance,” the report said.
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