APPLY TO REGISTER WITH THE FCA
FOR UK CRYPTOASSET SERVICES

Application Process

In accordance with the Crypto Assets Anti-Money Laundering (AML) / Combating Financing Terrorism (CFT) regime, anyone wanting to provide Crypto Asset Services in the United Kingdom within the scope of the money laundering regulations must apply to the Financial Conduct Authority (FCA) before carrying out the relevant activity. Businesses who are already registered or authorised by the FCA for other services will also have to register under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 (MLRs) if they intend to provide Crypto Services.

Application Process UK FCA Crypto

Preparing for the Application

In accordance with MLRs the applicant must demonstrate that they have adequate skills and experience to carry out the activity.

The FCA require a detailed application for their full assessment, the application should include the following:

Business Plan, inclusive of:
- The business model
- Roles and responsibilities of the business partners
- Sources of liquidity
- Detailed customer journey
- Flow of funds charts
- Financial forecasts
- Compliance oversight
- Risk mitigation

Comprehensive description of products and services

Risk Assessment and Management
- Applicants must demonstrate a thorough understanding of the risks associated with their dealings in crypto assets.
- There should be a business wide risk assessment (BWRA) that is tailored to its business model.
- a clear and correct understanding of the risks associated with crypto asset products must be demonstrated.

Policies, systems & controls inclusive of adequate evidence of the assessment of the strength of these controls.

Transaction monitoring and blockchain analysis coverage.

Group structure and reliance on group policies and procedures. This should include how the applicant intends to comply with the MLRs.

Complete information regarding outsourcing arrangement within and outside the group.

Training - the applicant must be evidence staff training tailored to its particular business model and associated risks.

Suspicious reporting activity - the policy must not be generic and must include information regarding controls.

Disclosures - the applicant must proactively inform customers that the crypto asset activities will not fall within the scope of the Financial Ombudsman.

Where the applicant is authorised in other activities it must demonstrate that it understands the requirements of the AML registration regime for crypto asset businesses. The applicant’s history including compliance failings will be taken into consideration.

The applicant must evidence adequate and current sanctions-specific controls within the applicant’s control framework in line with its crypto asset-based business model.

The applicant’s website or other marketing materials must contain an accurate and fair representation of the applicant’s products and services and must not contain misleading information.

Requirements-Regulations

Considerations, Requirements & Regulations

In deciding if FCA registration is likely to be required the following is taken into consideration:

Commercial element: The FCA will consider if the applicant advertises, acts or holds itself in such a way that suggests that they are providing services by way of business related to crypto asset services.

Commercial benefit: The FCA will evaluate whether applicant will receive direct or indirect benefit from this crypto asset service.

Relevance to other business: The FCA will look at the significance of the crypto asset services in relation to other services.

Regularity / frequency: the FCA will assess whether the frequency of the crypto asset service suggests that it is being carried on as a business.

Equity Requirements and Other Pre-Conditions

At present there are no minimum equity requirements for setting up a Crypto Company in the UK. The precondition for the establishment of a private limited liability company in the UK is at least one shareholder and one director, who may be the same person and a non-resident of the UK.

Regulation

The UK Government has stated it will bring crypto marketing activities within the regulatory net under the existing financial promotions framework established under section 21 of the Financial Services and Markets Act 2000 (“FSMA”) which imposes restrictions on the issue of an invitation or an inducement to engage in an investment activity, applying to “qualifying cryptoasset”, thus only an FCA authorised firm would be able to issue or approve crypto advertisements or other marketing.

However, in February 2023, an exemption was established where firms will not require “full” authorisation, allowing cryptoasset businesses registered with the FCA under the MLRs who are not otherwise authorised persons, to communicate their own financial promotions in relation to qualifying cryptoasset, however those benefiting from the exemption will not be able to approve or communicate financial promotions in relation to other controlled investments. The FCA is expected to release rules regarding the exemption.

Find out more

What Can FAI Comply do for Your Business?

We undertake the preparation and submitting of applications for FCA registration and provide post-submission support leading up to the granting of registration, which authorises companies to provide investment services in accordance with the applicable regulations. Services include:

Consulting on services, and design of the FCA application structure

With input from you, where required, reparation of the applicant's:

Internal Operations and AML Manuals according to UK regulations;
Business Plan,
Risk Assessment and Management Policy
Disclosures,
Reporting procedures.

Assistance preparing shareholder, director and senior management questionnaires

Application follow-up during the process of assessment by the regulator

WHAT CAN FAI DO UK FCA Crypto

UK FCA Cryptoasset
Financial Promotions Regime

All Cryptoasset businesses that wish to market their services to UK Clients must ensure that the promotion falls within the scope set out by the FCA. We offer the services of an FCA authorised person, enabling companies to market cryptoassets to the UK without the hassle of FCA registration.

FIND OUT MORE