The Financial Conduct Authority’s (FCA) head of enforcement and market oversight, Mark Steward, warned of 111 unregistered crypto asset firms.
Steward made these remarks at a City & Financial’s City Week event. The FCA department head said these unregulated, high risk, and volatile companies posed a risk to the broader financial system. As such, he warned consumers, banks and payment services companies against dealing with them.
“We have a number of firms that are clearly doing business in the UK without being registered with us and they are dealing with someone: banks, payment services firms, consumers,” he said. “This is a very real risk so we are worried about that.”
Extending registration deadline
Earlier this month, the FCA extended the deadline for its Temporary Registrations Regimes (TRR) until March 2022. Crypto asset firms that registered with the regulator before December 2020 can apply for the TRR. If accepted this would allow them to continue trading, while the FCA assesses their applications. The original deadline for the TRR was July 9, 2021.
The FCA said it was extending the deadline because many businesses were not meeting the required anti-money laundering standards. The FCA was appointed anti-money laundering and counter terrorist financing supervisor of crypto asset firms in January. As a consequence, “an unprecedented number of businesses” had withdrawn their applications, which poses a financial crime risk, Steward said.
Increasing crypto adoption
Meanwhile, the adoption of cryptocurrencies in Britain has grown. According to the most recent quantitative study from the FCA. Roughly 2.3 million British adults now hold crypto assets, a jump from the estimated 1.9 million in 2020. The study notes that while ownership increased, a general understanding of crypto assets seems to have diminished.
Despite lacking a thorough understanding, Steward says many new investors have bought in due to fear of missing out. Over the past year this demographic has remained largely middle to upper-middle class men over the age of 35. Steward likens this irrational exuberance to tulip mania of the 17th century.