Wirex has announced that it will temporarily halt new user registrations in the UK as it works on improving KYC/AML compliance.
Cryptocurrency payments firm Wirex announced a temporary pause on new user registrations in the UK, starting March 24, 2021. In a press release, the company attributed the decision to a dialogue with the UK’s Financial Conduct Authority (FCA). Wirex also said that its existing 3.5 million-strong user base would remain unaffected by this move.
“UK-based users keen to register for our app and card will be invited to join our waiting list during this temporary pause.”
According to the company’s CEO Pavel Matveev, users who express interest in Wirex in the interim will enter a waiting list. He also confirmed that the firm would use this time to incorporate the FCA’s suggestions on improving its identity verification process.
UK Exchanges Await FCA Approval
The UK FCA first asked crypto businesses to comply with the Fifth Anti-Money Laundering Directive (5AMLD) over a year ago. An extension of 4AMLD, the new directive emphasized cryptocurrency legislation in the European Union. Notably, 5AMLD assigns the responsibility of approval to individual national regulators.
Under the new directive, crypto exchanges have similar AML compliance requirements as traditional financial institutions. 5AMLD also introduced new reporting obligations for wallet providers to mitigate the effects of cryptocurrency anonymity.
A UK-based crypto trade association recently criticized the FCA for keeping exchanges in limbo for months. According to the group, hundreds of startups have yet to see any progress on their applications. Several existing exchanges are also awaiting approval with bated breath. Exchanges will have to cease operations within the UK if they do not secure support by July 2021.
Exchanges already operating in the UK had one year to comply with the guidelines outlined in the 5AMLD. However, the FCA granted interim relief and an extension to these entities in December 2020. Back then, the FCA blamed the pandemic for its growing backlog.
5AMLD in the UK: Another BitLicense in the Making?
According to the FCA’s official list of registered crypto-asset firms, only four firms have secured approval so far. Gemini’s Europe subsidiary is the only prominent exchange on the list. The regulator also published a separate list for exchanges with temporary authorization to conduct business.
Industry players have warned that the ongoing uncertainty could trigger a mass departure of crypto businesses from the UK. Indeed, New York State’s onerous and controversial BitLicense regulation drove out several crypto exchanges in 2015. The New York Business Journal even dubbed it the “Great Bitcoin Exodus.”
Given that Wirex announced this change, though, it’s likely that the FCA is finally clearing its backlog. It remains unclear if other firms operating on a temporary authorization will come under similar scrutiny.