A “significantly high” number of cryptocurrency trading companies do not meet the requirements set by the British authorities to prevent money laundering, as warned by the Financial Conduct Authority (FCA).
Businesses that offer cryptocurrency related services are required to register with the Authority. The service has implemented a temporary licensing system so that companies whose applications have not yet been approved will be allowed to continue operating.
The FCA said on Thursday it was extending the interim licensing period from July 2021 to March 2022.
“A high number of companies are not eligible for money laundering, with an unprecedented number of companies withdrawing their applications,” the FCA said.
Only 5 companies are currently registered with the FCA. Among them are Tyler, Cameron Winklevoss ’Gemini and the British start-up, Ziglu. There are dozens of applications waiting to be approved while in temporary status.
Cryptocurrencies like bitcoin have always been surrounded by concerns about their possible illegal uses in money laundering or cyber-attacks. This is because the people who trade them do not reveal their identities. Officials have also warned of the speculative nature of these assets.
In January, the FCA issued a vertical warning to investors. “Investing in cryptocurrencies or investments that involve them generally carries high risks for investors’ money. If consumers invest in such products, they must be prepared to lose all their money.”
The FCA reiterated its stance on Thursday, warning that many cryptocurrencies “are highly speculative and therefore can lose value quickly“.
BoE Governor Andrew Bailey made a similar statement last month. “Cryptocurrencies have no intrinsic value. Buy them only if you are ready to lose your money.”