T Skevington and M Bacina
Application anarchy in the UK: FCA deadline looms for cryptoasset applications
Today is the last day for businesses which carry out cryptoasset activity in the UK to lodge their applications for registration with the FCA, if they want to start operating on the implementation date of 10 January 2021. The FCA became the AML/CTF supervisor of UK cryptoasset businesses from 10 January 2020, in accordance with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs).
While the actual registration requirement does not become active until 10 January 2021, today's deadline was set by the FCA to allow them sufficient time to review submitted applications and raise any follow-up questions with firms, with enough time for that process to be completed before 10 January 2021.
As a reminder, the FCA has published a flowchart designed to help businesses determine whether they need to apply for registration with the FCA, the key excerpt of which follows:
Applications for registration are made online, by filling in an online application form and paying a registration fee. The application is similar to an Australian application for registration as a Digital Currency Exchange, in that it requires applicants to provide information about the applicant and key individuals in the business. Unlike the Australian equivalent, the FCA requires substantially more information, including details of:
Business Plan: setting out the business objectives, customers, employees, governance, plans and projections. It should provide enough detail to show that the proposal has been carefully thought through and that the adequacy of financial and non-financial resources has been considered. It should also include details on the volume and value of transactions, number and type of clients, pricing and the main lines of income and expenses.
Marketing plan: including a description of customers and distribution channels.
Systems and controls: provide details of the key IT systems you will use to run the business, including details of IT security policies and procedures.
All cryptoassset public keys/wallet addresses: this should include all of the cryptoasset addresses controlled by the business and used in the activity of the business for each cryptoasset that the business deals with.
Ignorance of the deadline is unlikely to hold up as an excuse, as the application deadline was first announced on 10 January 2020.