Crypto exchange scores regulatory first with trading licence from FCA

One of the world’s largest startup cryptocurrency exchanges has won a trading licence from UK regulators, becoming the first firm in the sector to do so.

Crypto Facilities has been granted a Multilateral Trading Facility licence by the Financial Conduct Authority, which allows it to offer a wider range of products and deal with regulated investors with strict investment mandates.

The futures-focused exchange, an offshoot of Kraken, is the first cryptocurrency platform to obtain the licence. An MTF licence is usually granted to approved market operators or larger investment banks to allow retail investors to trade financial securities.

The move makes Crypto Facilities the only regulated derivatives marketplace in Europe to offer trading in crypto products, according to Timo Schlaefer, the firm’s chief executive.

“Traditional trading firms could have traded with Crypto Facilities before, but they might have internal compliance requirements that limit them to trading on regulated trading venues,” Schlaefer told Financial News.

Kraken purchased Crypto Facilities in early 2019 for an undisclosed sum north of $100m, and the business now has 35 staff based in its London office. Kraken is headquartered in San Francisco.

Schlaefer said the MTF licence had taken one to two years to obtain and that the process had been “very detailed”.

While regulators seek to get their heads around the cryptocurrency sector, some businesses have turned to regulators in less well-known business hubs – such as Malta and Gibraltar – to acquire licences to operate.

But Schlaefer said that “the devil is in the detail” when it comes to crypto regulation.

“Many times, if some exchange gets some sort of payments licence, they then announce it as them then being regulated… But what is actually regulated here with the MTF is the exchange itself,” he added.

The FCA recently revealed a 1.1m spike in the number of British consumers investing in cryptocurrencies.

The UK watchdog has been working to bring the sector under its oversight. Any crypto firm that is not registered with the FCA by 10 January 2021 will be forced to close down.

To contact the author of this story with feedback or news, email Ryan Weeks

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