Question to the HM Treasury:

To ask the Chancellor of the Exchequer, (a) what progress the Financial Conduct Authority has made in its registration process for cryptoasset businesses under the Money Laundering Regulations, (b) how many applications are currently being reviewed under that process, (c) how long he expects approvals to take on average under that process and (d) what recent assessment he has made with the FCA of the challenges it may face in that process.

The FCA has a clear process for evaluating cryptoasset firms' applications to ensure they meet the minimum Anti Money Laundering/Counter Terrorist Financing standards for operating in the UK. This involves assessing the fitness and propriety of the individuals running the firms and the adequacy of their systems to prevent criminal financial flows.

The FCA has received over 300 applications for registration and approved and registered 41 firms; 223 were either refused or withdrew their application, 29 submissions were rejected and 23 applications are under assessment as of the 28th April 2023. The cryptoasset firms that were refused were unable, in the FCA’s view, to meet the required Anti Money Laundering/Counter Terrorist Financing standards.

The FCA has a statutory deadline of 3 months to make a decision on an application, starting from the receipt of the application or the last piece of information required for a decision. The average processing time of applications can be affected by the number of firms in each situation, and it can vary significantly over time. The FCA strives to be fair to firms that are close to meeting the standards and not to expending disproportionate effort on those that are far from meeting them. Firms can make necessary changes based on feedback and reapply when ready.

HMT and FCA officials remain in regular contact to discuss any challenges associated with the application process; both for the FCA and firms. Our joint priority remains the adoption of a risk-based and robust approach which strikes the appropriate balance between ensuring high levels of AML compliance and consumer protection while harnessing the innovation of cryptocurrency for the future prosperity of the UK.