Late last week, the United Kingdom’s Financial Conduct Authority issued temporary licenses to applicant companies looking to become licensed crypto-asset firms. However, with the publication of this list of temporarily authorized firms has come a large amount of confusion for those that applied or were thinking of applying.
The deadline for companies to have acquired this license is Jan. 10, 2021. Under the current rules, companies that have a nexus within the U.K. and have failed to obtain the license before this date will no longer be able to deal in or manage crypto assets.
In order to meet that deadline, the FCA has told companies to submit their applications on or before July 31, 2020. The expectation was that this would give companies enough time to get through the process with the FCA.
The application procedure itself was similar to other FCA application types, such as claims management firms. There were enhanced questions around software, which were made easier for companies that used pre-made software to manage their transaction monitoring and Know Your Customer arrangements. On the whole, the application process was not a complex one.
Worry set in at the beginning of December when none of the 150 firms that had made the application before the deadline had heard anything from the FCA. Gresham International submitted an estimated 10%–20% of the applications and only had a response on two of them. These responses were nothing more than a request for another copy of the business plan.
With the Jan. 10 deadline fast approaching, many began to believe that the FCA was getting ready to drop the ball.
Temporary license issues
On the morning of Dec. 16, the FCA announced it was going to issue temporary licenses to companies that had made an application. However, after inspection, it was clear that some companies that had made the application before the deadline were not featured on the temporary authorization list.
After conducting an investigation, it was later…