The UK’s crypto industry faces significant challenges due to a tough regulatory environment. The Financial Conduct Authority (FCA), the country’s financial watchdog, has approved only four out of 35 crypto business registration applications in the past year.
This stringent process has deterred many companies from pursuing official registration, creating concerns about the UK’s ability to remain competitive in the rapidly evolving crypto market.
CryptoUK, a self-regulatory trade association representing the UK crypto sector, reports that several of its members are hesitant to go through the FCA’s lengthy and resource-heavy application process.
Many companies have withdrawn their applications altogether, citing the complexity and time it takes to meet the FCA’s rigorous standards.
Since January 2020, all crypto-related businesses in the UK have been required to register with the FCA to comply with Anti-Money Laundering (AML) regulations.
However, nearly 90% of applications submitted in the past 12 months were rejected due to insufficient fraud protection and AML measures, with some companies reporting that the process feels more like a burden than a safeguard.
The time-consuming nature of the registration process is also a concern. On average, it takes over a year for the FCA to approve an application—comparable to the time required to obtain a full banking license.
While the FCA has begun making strides to speed up approvals, many believe the process remains too slow and lacks collaboration between the regulator and the industry.
Some industry experts argue that the UK’s rigid approach risks pushing crypto businesses to more crypto-friendly regions, such as Dubai and Bahrain, where regulatory frameworks are being implemented faster.
Although the UK government has expressed interest in making the country a leader in crypto innovation, progress has been slow.
Despite the challenges, many crypto businesses in the UK are still eager to comply with regulations but are waiting for greater clarity and support from both regulators and the banking sector.
The introduction of the Property (Digital Assets etc) Bill, which seeks to recognize crypto assets as legal property, has been a positive step forward, but the industry continues to call for more efficient regulatory processes to help the UK stay competitive in the global crypto market.
