The Financial Conduct Authority (FCA) of the United Kingdom takes over a year to process crypto firms' registration applications, according to data analyzed by law firm Reed Smith over the past three years.
Application processing time
The average time to process a crypto firm's registration application at the FCA is 459 days. Reed Smith law firm found that a total of 25 man-years had been spent on application processing. Reed Smith partner Brett Hillis noted: > "It seems that even though approval times are falling, the time taken to grant approval remains something of a drag on the UK’s broader ambition to become a crypto hub."
Challenges for crypto firms
Despite the lengthy process, the FCA has been active in the crypto sector. Since new rules on crypto asset promotion came into force in October 2023, the agency has issued application extensions and repeated guidance. However, the UK's National Audit Office critiqued the FCA’s enforcement efforts in a December report, indicating that the agency may lack sufficient qualified staff for effective regulation.
Decrease in applications
The number of applications to the FCA has been declining. In the first quarter of 2024, seven applications were received, totaling 29 applications from May 2023 to April 2024. This is down from 42 applications the previous year and 59 the year before that. Meanwhile, 186 firms withdrew their applications within the three-year period. Brett Hillis noted: > "If it’s the case that applications are falling because crypto firms have essentially given up waiting and started looking abroad, this should send a clear warning about London’s competitiveness." He also added: "The good news is that the falling number of applications suggests that firms are now much better acquainted with what the regulator expects."
The lengthy processing times for crypto firms' registration applications by the UK's FCA raise questions about the agency's ability to support the growth of the crypto industry in the country. The decrease in applications may indicate firms' dissatisfaction with the process and a growing understanding of regulatory requirements.
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