In the world of cryptocurrency, there’s no shortage of confusing, vague and sometimes contradictory guidelines. The same goes for cryptoasset licencing, so we’re here to set the record straight.
In the UK, financial transactions with cryptocurrencies are regulated. This means all companies planning to provide crypto services in the UK must register with the Financial Conduct Authority (FCA). Only then can you obtain a crypto licence and comply with Anti-Money Laundering (AML) and Combatting the Financing of Terrorism (CFT) regulations.
The FCA have warned that carrying out a registrable crypto business in the UK without proper registration can constitute a criminal offence. This applies to firms that:
- Exchange cryptoassets for fiat currency and/or other cryptoassets
- Operate a machine which utilises automated process to exchange cryptoassets for money or money for cryptoassets
- Safeguard cryptoassets or private cryptographic keys on behalf of customers
- Have a presence in the UK market, such as an office with domestic employees.
The FCA controls all parties involved in the buying and selling of cryptocurrency using the “Know Your Customer” (KYC) procedure. This includes ID and face recognition, proof of address and biometric verification. Other requirements for obtaining cryptocurrency permission in the UK are:
- A programme of operations: setting out your firm’s cryptoasset activities
- A business plan: including a record of transactions, clients, pricing, income and expenses
- A marketing plan: including customers and distribution channels
- Structural organisation: a description of how your business is structured
- Systems and controls: provide details of the key IT systems you will use,
- Governance arrangements: provide details of governance arrangements and internal controls
- AML/CFT risk assessment: specific to your business model
- Business-wide risk assessment: with monitoring and mitigation policy
- All cryptoasset public keys/wallet addresses
With specialist support, your licencing application can be submitted within three to four weeks. The FCA usually make a decision within three months from receiving your application.
You can obtain further information by reading our Guide to Cryptocurrency page here, or for expert information on cryptoasset licencing and the costs involved, please contact Turner Little today.