In This Post:
- The UK’s FCA is taking over a year to process crypto registrations.
- Reed Smith’s report warns firms may seek faster approval elsewhere.
- 186 crypto firms withdrew applications in the past three years.
- The UK’s crypto hub ambitions face hurdles due to slow FCA processes.
The UK’s ambitions to become a global crypto hub are facing serious obstacles due to sluggish processing times by the Financial Conduct Authority (FCA). According to a report from the law firm Reed Smith, it takes the FCA an average of 459 days—over a year—to process a crypto asset exchange or custodian wallet provider’s registration.
This extended wait time is casting doubt on the UK’s ability to attract and retain crypto businesses, as many firms are now considering more responsive jurisdictions.
FCA’s Slow Processing
Reed Smith’s findings were based on a Freedom of Information request, revealing that the FCA has been overwhelmed by the number of applications, dedicating 25 years of manpower just to processing these registrations over the last three years.
Despite a slight improvement in the pace of approvals, the law firm’s partner, Brett Hillis, cautioned that these delays are undermining the UK’s broader goal of becoming a leader in the crypto space.
The FCA has not been idle, however. Since the introduction of new crypto asset promotion rules in October 2023, the agency has been actively issuing application extensions and offering updated guidance to applicants.
Despite these efforts, a report from the UK National Audit Office in December criticized the FCA’s enforcement capabilities, noting a shortage of qualified staff, which further complicates the agency’s ability to keep up with the rapidly evolving crypto landscape.
Dwindling Applicant Numbers
The lengthy wait times have had a noticeable impact on the number of new registrations. The FCA received only 29 applications between May 2023 and April 2024, a sharp decline from the 42 applications in the previous year and 59 the year before that.
This dwindling interest suggests that many crypto firms are losing patience and may be exploring other jurisdictions that offer quicker and more efficient registration processes.
Over the past three years, a staggering 186 firms withdrew their applications, further highlighting the growing frustration within the industry. Hillis pointed out that this decline could be a mixed blessing.
On one hand, it suggests that firms are better informed about the FCA’s expectations and are likely to submit more robust applications. On the other hand, it signals that the UK’s competitiveness as a crypto hub may be at risk if firms continue to be deterred by the prolonged registration process.
In the face of these challenges, the UK must reconsider its approach if it hopes to maintain its position as a global leader in the crypto industry. Without significant improvements in processing times and regulatory clarity, the UK risks losing out to more agile and crypto-friendly jurisdictions.
