All firms who conduct business in the UK and to engage in crypto-related operations have to register on the FCA Connect platform. The FCA published a flowchart and a consultation paper to provide guidance and encourages crypto firms to take legal advice. If a firm fails to register, a fine up to GBP 10.000 can be charged up and further enforcements steps might be initiated by the UK regulator. If a firm is not on this list, the firm's activity could be rendered unauthorised.
The list includes some top firms that are very active in the UK market.
The top 5:
- eToro (UK) Ltd
- Huobi Technology Europe Ltd
- Crypto Facilities Ltd (Kraken Futures)
Some well-known large crypto exchanges that are mainly active in the EU, US or Asia are not on the list. Exclusion may apply, however. Also, one of the largest and also FCA recognised crypto firms is Coinbase, i.e. CB Payments Ltd. Another registration is obsolete in this case. Coinbase already holds the e-money license.
Such operations are specifically described in Regulation 14A of the MLRs as follows:
14A. (1) In these Regulations, “cryptoasset exchange provider” means a firm or sole practitioner who by way of business provides one or more of the following services, including where the firm or sole practitioner does so as creator or issuer of any of the cryptoassets involved, when providing such services— (a)exchanging, or arranging or making arrangements with a view to the exchange of, cryptoassets for money or money for cryptoassets, (b)exchanging, or arranging or making arrangements with a view to the exchange of, one cryptoasset for another, or (c)operating a machine which utilises automated processes to exchange cryptoassets for money or money for cryptoassets.
(2) In these Regulations, “custodian wallet provider” means a firm or sole practitioner who by way of business provides services to safeguard, or to safeguard and administer— (a)cryptoassets on behalf of its customers, or (b)private cryptographic keys on behalf of its customers in order to hold, store and transfer cryptoassets, when providing such services.
(3) For the purposes of this regulation— (a)“cryptoasset” means a cryptographically secured digital representation of value or contractual rights that uses a form of distributed ledger technology and can be transferred, stored or traded electronically; (b)“money” means— (i)money in sterling, (ii)money in any other currency, or (iii)money in any other medium of exchange,but does not include a cryptoasset; and (c)in sub-paragraphs (a), (b) and (c) of paragraph (1), “cryptoasset” includes a right to, or interest in, the cryptoasset.]
The FCA notes that not only crypto-related operations fall in scope of the MLR but also a broader set of activities listed in Regulation 8 - "Application" and Regulation 9 - "Carrying on business in the United Kingdom" MLR.