If you hold cryptoassets, now is the time to check whether the company you’re holding it with is registered with the Financial Conduct Authority (FCA) – under updated regulations, all UK cryptoasset firms must now be registered to legally operate in this country.
The firms had to submit an application to register with the FCA by 15 December 2020, and if they missed the deadline, they must stop trading within the UK and return customers’ money by 10 January 2021. Basically, anyone still operating in the UK and not on the FCA register is now breaking the law.
This is part of the FCA’s new powers to tackle money laundering and terrorist financing in this still largely unregulated industry.
While firms must now register with the FCA, it doesn’t actually give consumers any additional protection.
The Authority considers cryptoassets to be “very high risk, speculative investments” where investors should be prepared to lose all of their money, as such investments are unlikely to benefit from safety nets such as the Financial Ombudsman Service (FOS) or the Financial Services Compensation Scheme (FSCS).
But in light of the new regulations, the FCA suggests investors do three things:
Step 1: Consumers should check if the firm they’re using is on the Financial Services Register or list of firms with Temporary Registration (Note: appearing on the Temporary Registration Register does not mean that the FCA has assessed them as fit and proper, nor that the FCA has determined their application for the purposes of the Money Laundering Regulations).
Step 2: If they’re not, consumers should ask the firm whether they are entitled to carry on business without being registered with the FCA.
Step 3: If they’re not, the FCA suggests that consumers should withdraw their cryptoassets and/or money. This is because the firm is operating illegally if it has not ceased trading by 9 January 2021.