The Financial Conduct Authority (FCA), the UK’s main financial regulator, has issued a warning to Bahamas-based crypto exchange FTX, claiming it is operating without authorization. The company joined a growing list of unregistered cryptocurrency-related companies that still outweigh the companies that have registered with the FCA.
A warning, dated September 16, claims that the company “may provide financial services or products in the UK without authorization.” The FCA addresses potential customers, noting that they cannot get their money back or seek the protection of the Financial Services Compensation Scheme “if something goes wrong.”
By the end of August, the list of crypto companies registered with the FCA included 37 entities, with Crypto.com becoming the latest to join. Other companies that managed to complete the registration process in 2022 to obtain money laundering regulatory approval included eToro UK, DRW Global Markets LTD, Zodia Markets (UK) Limited, Uphold Europe Limited, Rubicon Digital UK Limited and Wintermute Trading LTD.
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New cryptocurrency-focused regulations were put in place in January 2020 to allow the FCA to monitor companies operating in the space and enforce AML and terrorist financing regulations. As the FCA spokesperson explained to TBEN in August:
“Successful registration depends on a company meeting the minimum standards we expect to prevent money laundering and terrorist financing, and we have missed too many financial crime red flags by the crypto asset companies seeking registration.”
While there is no clear understanding of what the immediate impacts on the unregistered entities might look like, the FCA is certainly not a vegetarian when it comes to enforcement. On September 13, one of the UK’s largest electronic payment providers, ePayments, closed its business three years later after receiving a respective injunction from the FCA over alleged weaknesses in its “financial crime controls.”
It’s not the first time FTX has caught the attention of regulators lately. On August 19, the Federal Deposit Insurance Corporation (FDIC) issued a letter of termination for the company, alleging that it misled the public about certain cryptocurrency-related products insured by FDIC.