UK Crypto Exodus Looming as Regulatory Deadline Approaches

Key Insights:

  • FCA deadline for crypto company registration is fast approaching.
  • Several companies are already planning moves to friendlier European countries.
  • Britain may see an exodus of talent and lose its financial status.

The United Kingdom’s Financial Conduct Authority (FCA) plans to close its temporary registration program for crypto asset businesses on March 31. This could leave some big names such as digital bank Revolut and crypto custodian Copper Technologies in limbo.

According to Bloomberg, there are 12 companies still on the temporary register as of March 29. They will have to suspend their services if they do not secure approval by the deadline on Thursday.

Exodus to Friendlier Climes

Just as crypto miners left China in droves when Beijing banned mining, the same could happen with fintech firms based in the U.K.

The Bank of England and the Treasury have ramped up their anti-crypto rhetoric in recent months as markets have gone through another bull run and prices have surged. Only 33 firms have achieved permanent registration with the FCA, leaving many others facing a move to Europe or beyond.

Six firms, including crypto market maker B2C2 and crypto digital banking apps Wirex and Trastra, were recently removed from the temporary register after failing to secure approval. The FCA may extend the deadline, but crypto companies have already started to plan their moves to countries such as Switzerland and Croatia, which have a more welcoming approach to digital assets.

CoinBurp Chief Executive Peter Wood told Bloomberg that it is not providing crypto services in the U.K., but it is “in the process of restoring this” shortly. The firm fell off the register on March 25, and several others, such as Wirex Digital, which plans to serve U.K. clients from a Croatian subsidiary.

London-based crypto custodian and trading services provider Copper, which has more than 150 employees, is pursuing regulatory approval in Switzerland. In recent years, the country has become a hub of blockchain, fintech, and crypto activity.

Falling Behind

Earlier this year, former U.K. Chancellor of the Exchequer Philip Hammond said that it was “frankly quite shocking” that the country is so far behind its European counterparts with regulations for crypto assets. He warned that the U.K. might face losing talent and its long-running status as a finance hub.

U.K. head of the already approved Gemini crypto exchange, Blair Halliday, commented:

“Our concern with any legislation is where it unfairly impacts firms going about it the right way in the jurisdiction, and by definition, drives customers to an easier location off-site. That’s a potential byproduct of some of these proposals — how on earth can that be positive?”

Binance (BNB) is probably the largest crypto firm that pulled its application to operate in the U.K. last year. It is still grappling with regulators to this day but may take the easy option and service British crypto traders from a friendlier nation.