Crypto.com announced on Monday that it has been authorised as an Electronic Money Institution (EMI) by the U.K.’s Financial Conduct Authority (FCA). This summer, the exchange received regulatory approval from the FCA as a crypto asset business under the name of Forisgfs UK Ltd. The Cryptoasset Register focuses on AML/CTF compliance, while the new license will allow the exchange to offer a broader range of e-money products in the U.K., including the ability to provide payment services and issue digital cash alternatives.
“The UK has and continues to be a hugely important market for our business and the greater industry. We look forward to continuing to collaborate with a global regulatory leader in the FCA in our collective pursuit of responsible innovation for crypto,” - Crypto.com CEO Kris Marszalek said.
Other exchanges with EMI licenses in the country include Coinbase and Gemini. Last month, PayPal UK also registered with the FCA to offer crypto asset activities within the country but has faced significant limitations.
Lately, Crypto.com has been heavily focused on complying with regulators around the globe. It currently holds various licences in jurisdictions such as France, Spain, Singapore, South Korea and Australia. In the U.S., the exchange is regulated by the CFTC as a Derivatives Clearing Organisation.
According to a company announcement, the most recent license secured is from Dubai (although this is not reflected yet in the VARA Register). Following operational approval, it will allow Crypto.com to offer regulated virtual asset service activities, including exchange services, broker-dealer services, lending and borrowing services in the country, which aims to become a leading crypto hub. The exchange had previously obtained a Preparatory License in Dubai this April.
The apparent reason for these licensing efforts is the increasing regulatory scrutiny against the industry worldwide. Taking into account vague crypto regulations in many countries, global compliance is getting significantly more complicated, even for registered entities.
The U.K. government has been on a legislation spree since adding crypto assets to the Financial Services and Market Bill in June 2023. At the end of October, the Treasury published its proposals for future regulation of crypto asset activity. The government said it will put several crypto-related activities (which, for some reason, do not cover DeFi) under the same regulations that govern banks and other financial companies. The regulation is expected to be presented to Parliament in 2024.
Recently, the government has also confirmed that it is going to elaborate on legislation for a new initiative called the Digital Securities Sandbox, which will facilitate the adoption of digital assets across financial markets. Another Digital Sandbox by the FCA (yes, they have two) aims to support firms in the early stages of digital product development. The country also recently implemented the Travel Rule, which made crypto-exchange Gemini limit UK-based users' inbound and outbound transfers.
While the U.K. is not among the most crypto-friendly jurisdictions at the moment, it is trying to create better conditions for the crypto assets industry, with the hope of becoming a crypto hub (along with many other countries). Despite its good intentions to ensure market stability and provide proper consumer protection, regulatory "diversity" and severity might eventually turn out to hurt the industry rather than promote future innovation.
