A version of this story appeared in our The Guidance newsletter on August 26. Sign up here.

GM, Joanna here.

The industry’s dreams of turning the UK into a crypto haven have stalled as the Financial Conduct Authority hasn’t approved any crypto businesses for six months.

Back when now-defenestrated Prime Minister Rishi Sunak was Chancellor of the Exchequer in 2022, he pledged to transform Blighty into a “global cryptoasset technology hub.”

That promise now seems far away.

The last entity the Financial Conduct Authority registered was institutional market-maker Portofino Technologies in February, according to the regulator’s registry.

Registry data updated on August 1 shows the FCA received 34 applications in the past 12 months, four of which were successful.

Apart from Portofino, the firms approved in that period were crypto bank Banxa UK, payments giant PayPal, and custodian Koimanu.

Of those initial 34, 16 withdrew their applications before they could be approved or denied.

Firms must register with the FCA if they want to offer services like crypto trading or providing wallets.

But lobbyists complain that the FCA’s rules are prescriptive, onerous, and confusing — particularly those covering marketing to consumers.

Both Binance and PayPal have suspended crypto services in the UK, blaming these so-called promotions rules.

The FCA published a report this month on how well crypto firms complied with various aspects of these rules, which kicked in in October.

“For many UK cryptoasset firms, this is the first conduct regulation they have needed to comply with, and they have been required to invest in significant technical developments,” the report said.

Crypto firms must ‘be fit and proper’

The FCA defends its low rate of registrations, saying that most crypto firms fail to meet its anti-money laundering standards.

“We expect firms to be fit and proper and have adequate systems to identify and prevent flows of money from crime,” an FCA spokesperson told DL News.

The regulator has a strict consumer protection mandate, and the standards to which it holds firms “are essential to protecting people and the integrity of our financial system,” the spokesperson said.

After all, losses on crypto investments aren’t eligible for government compensation in the way that bank deposits are.

Reach out to me at joanna@dlnews.com.