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Treasury Committee: 85% of crypto firms failed to meet minimum standards, according to FCA

26 January 2023

Around 85 per cent of crypto-asset firms who applied to the Financial Conduct Authority (FCA) were unable to demonstrate they met the minimum standards required for registration under its anti-money laundering and counter-terrorist financing regime.

The statistic comes in new correspondence published today by the Treasury Committee, in response to questions asked during an oral evidence session with senior individuals from the FCA, as part of the Committee’s inquiry into the crypto-asset industry.

The FCA found that key personnel lacked the appropriate knowledge, skills and experience to carry out their roles and control risks effectively.

In a small number of cases, the financial regulator identified likely financial crime or direct links to organised crime, and referred the firms to law enforcement agencies.

During the evidence session, the FCA revealed that a significant proportion of crypto firm applications were of a poor standard, with only five per cent being progressed on the first attempt. The regulator outlined that 73 per cent of the applications have been withdrawn or failed, which was the most significant withdrawal or failure rate they have seen when taking on a new remit.

Commenting on the correspondence, Harriett Baldwin MP, Chair of the Treasury Committee, said:

“We are in the middle of an inquiry into crypto regulation and these statistics have not disabused us of the impression that parts of this industry are a ‘Wild West’."

Further information

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