Bitcoin crisis: UK companies hit by strict rules - dozens may shut due to crypto links

The Financial Conduct Authority (FCA) said a “significantly high number” of the UK’s cryptocurrency traders are falling short of anti-money laundering standards intended to stop criminals and terrorists. It said an “unprecedented number” of companies had withdrawn applications from a temporary permit scheme that allowed them to continue trading while the FCA assessed their operations.

Firms that pull out of the permit process are required to stop trading immediately.

Companies that refused could face fines or legal action by the FCA.

So far only five crypto asset firms have been admitted to the FCA’s formal register so far.

Another 90 firms are on the temporary permit scheme, which has been extended by nine months to allow the FCA to fully review all of the applications.

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But on Thursday it emerged that an “unprecedented” 51 companies had withdrawn their applications.

Some may not be covered by the FCA’s rules to register, meaning not all of them will be forced to shut down.

It said in a statement: “A significantly high number of businesses are not meeting the required standards under the Money Laundering Regulations resulting in an unprecedented number of businesses withdrawing their applications.

“The extended date allows crypto asset firms to continue to carry on business whilst the FCA continues with the robust assessment being undertaken.”

It added: “Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money.

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“If consumers invest in these types of product, they should be prepared to lose all their money.”

The FCA reiterated its stance Thursday, warning that many cryptocurrencies are “highly speculative and can therefore lose value quickly.”

Bank of England Governor Andrew Bailey - who was previously chief executive of the FCA - also warned about the dangers of crypto last month.

He said they had “no intrinsic value” and said investors risked losing everything.

He added: “Buy them only if you’re prepared to lose all your money.”

Despite his stern warning, the popularity of crypto continues to skyrocket.

Last week UK bank Standard Chartered said it is launching a digital asset brokerage and exchange platform for UK and European institutional and corporate clients.

The investment bank will launch the platform alongside BC Group, a digital asset firm which manages Hong Kong-licensed crypto exchange OSL.

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