The UK’s Financial Conduct Authority (FCA) has amended the registration fees it will charge cryptocurrency companies. The agency will reportedly now operate a two-tier system based on the net income of a firm.
The FCA had initially proposed a fixed fee of £5,000 (~$6,500) for all companies. Under the amended fee structure, companies with a net income of less than £250,000 will only pay £2,000. Meanwhile, those with a net income of more than £250,000 will pay £10,000.
Prompting the change is feedback from the UK’s cryptocurrency industry. Objections made by smaller companies during a consultation in October, when the FCA first proposed the £5,000 fees, resulted in Monday’s amendments. [FCA.org.uk]
The FCA proposed the fees based on the cost it would bear to register the estimated 80 potential applications. It wrote in October:
“We estimate the total cost of this process at approximately £400,000 and we are aware of some 80 potential applicants. We accordingly propose to set the registration fee at £5,000.”
Although willing to give smaller companies a chance, the agency needs to make up the money somewhere. This has resulted in a disproportionately large increase for bigger cryptocurrency businesses. [Finance Magnates]
As BeInCrypto reported last month, the FCA will be taking a larger role in the regulation of the cryptocurrency industry going forward. The agency will be directing initiatives aimed at preventing money laundering and terrorist financing using digital assets under The Economic Crime Plan 2019-22. [Gov.uk]
The FCA also requires all companies working in the cryptocurrency industry to register with it. It has set a deadline of January 2021, which will require firms to submit applications by June of this year.
The regulatory changes come as part of a wider European clampdown against money laundering. The EU’s Fifth Anti-Money Laundering Directive (5AMLD) broadens the scope of existing money laundering regulations to include cryptocurrency service providers. As BeInCrypto has also previously reported, the changes look set to impact the way some of the largest companies in the industry do business.
Earlier this year, the cryptocurrency derivatives trading venue Deribit announced its withdrawal from Europe, citing the regulatory changes. The likes of Binance and OKEx, both based in the European nation of Malta, will also likely follow suit, or be forced to adjust their current operations significantly.