Why do cryptoasset businesses need to register with the FCA?
On 10 January 2020, the UK’s Money Laundering and Terrorist Financing (Amendment) Regulations 2019 (the MLR Amendment) entered into force.
The MLR Amendment assigned the FCA with responsibility for the supervisory and enforcement aspects of the anti-money laundering and counter-terrorist financing regulation in respect of UK cryptoasset businesses.
In accordance with the MLR Amendment, all UK cryptoasset businesses must register with the FCA. Existing cryptoasset businesses (i.e., those that were already carrying on cryptoasset activity in the UK immediately before 10 January 2020) are able to continue with that business, in compliance with the MLR, provided they are registered with the FCA by 10 January 2021.
Any new businesses which began operating after 10 January 2020 must be registered with the FCA before carrying on any cryptoasset activity.
In each case, failure to register by the required deadline will mean that the relevant cryptoasset business must stop all cryptoasset activity. For a detailed review of the MLR Amendment and its effect on UK cryptoasset businesses, please see our previous client alert.
Who does the registration requirement apply to?
The registration requirement applies to cryptoasset exchange providers and custodian wallet providers,1 if they carry on cryptoasset activity within the scope of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (as amended by the MLR Amendment, the MLRs), and if this activity is conducted in the course of business carried on in the UK.
It is worth noting that firms authorised or registered under the Financial Services and Markets Act 2000, Electronic Money Regulations 2011 or the Payment Services Regulations 2017 who also carry on a cryptoasset activity subject to the MLRs will be required to apply for registration.