Cryptocurrency exchange Crypto.com has been given approval to offer crypto asset services and products to customers in the UK by the Financial Conduct Authority (FCA). The move is part of a global push into new markets by the Singapore-based company.
It has described UK market as “strategically important”, specifically citing an increase in crypto adoption and the government’s agenda to make the country a “hub for crypto assets” among the reasons for going through the approval process.
The company has also signed a pre-registration undertaking with the Ontario Securities Commission in Canada signalling its intent to offer crypto products and services in line with its regulations. This is the latest in a number of agreements in Canada giving it permission to operate.
Cryptocurrencies themselves are not regulated in the UK, with no compensation available for businesses or consumers who lose their digital assets, but companies wishing to sell services in this space do have to comply with FCA anti-money laundering and terrorist financing rules.
Crypto.com’s push to woo UK and other markets
Founded in 2016 in Hong Kong as Monaco, Crypto.com changed its name in 2018 and is now operated by Singapore-based Foris DAX Asia.
It has more than 50 million users around the world and now operates in 90 countries following rapid expansion efforts including gaining regulatory approval in the Cayman Islands, South Korea, Italy and Cyprus in the last month alone.
Gaining FCA approval in the UK is a key step in the process of expanding operations in the country. The process required Crypto.com to meet the same anti-money laundering standards as traditional financial services companies. The rules were updated by the FCA in April, and since then 37 out of 100 cryptocurrency-based companies to apply have been granted approval.
Crypto.com CEO Kris Marszalek said: “We are committed to the UK market and we look forward to developing our platform and presence in the UK further by expanding our offering to customers while continuing to work with regulators.”
There were several senior hires by Crypto.com in the UK in March including a UK general manager and head of sustainability and ESG. The company is said to see the UK as a high-potential market following a 650% increase in adoption of cryptocurrency assets between 2018 and 2021.
Increasing moves to regulate crypto
It has been in a battle with fellow crypto exchange Binance to establish itself in different countries and gain acceptance from regulators allowing it to provide commercial services. So far Binance hasn’t been able to gain approval from the FCA, and last year was effectively banned in the UK after concerns were raised over the platform’s potential use for money laundering.
Other crypto exchanges to be given approval include Gemini, Kraken and eToro, while companies like Cooper Technologies, B2C2 and Wirex had their UK applications rejected or “voluntarily withdrew” from the regulatory process.
The UK is working to introduce more cryptocurrency assets and services regulation, including bringing stablecoins under the remit of the Financial Services and Markets Bill, published last month.
Stablecoins are a type of cryptocurrency which have their value attached to the performance of a conventional fiat currency such as the US dollar. Because of this, they can usually avoid wild fluctuations in value while still maintaining the privacy and instant payments which cryptocurrencies offer.
A ‘reserve’ of fiat currency equivalent to the amount of stablecoin in circulation is held by the issuer as an additional level of security. However, stablecoins including Terra and Tether have run into difficulties in recent months, with doubts being raised about the size of their cash reserves.
Harry Eddis, global co-head of fintech at law firm Linklaters, said: “Bringing stablecoins into the scope of regulation is a significant milestone. It is the first time that the UK licensing regime will specifically cater for a type of crypto asset.”
Crypto.com has not proved so popular with other UK regulators, having come in for criticism from the Advertising Standards Authority (ASA) earlier this year for showing “misleading information” in its advertisements. Two adverts were banned, one showing interest earnings rates and another mentioning buying Bitcoin with a credit card. The ASA said the adverts failed to show the risk of the investment and were “irresponsible and took advantage of consumers’ inexperience or credulity”.