FoI data reveals that the FCA reports having devoted the equivalent of 25 years to reviewing applications.
Applications for registration as cryptoasset exchanges or custodian wallet providers have dropped by 51% over the past three years, according to data from a Freedom of Information request by global law firm Reed Smith.
The FCA reports receiving just 29 applications between May 1, 2023, and April 30, 2024, compared to 42 and 59 in the two preceding years. Only seven applications were submitted in Q1 2024, making it the joint second-lowest quarter in the past three years.
Approval times for these applications have averaged 459 days over the last three years, leading experts to question whether the lengthy process is hindering the UK’s ambition to become a global crypto hub.
Despite this, the number of firms withdrawing their applications has decreased by 78% in the last year, indicating a better understanding of FCA expectations.
Since May 2021, the FCA has spent the equivalent of 25 years assessing crypto applications. Following the implementation of new financial promotions rules in October 2023, the FCA identified 1,010 breaches within the first seven months.
Brett Hillis, Partner at Reed Smith, commented on the findings, highlighting the FCA’s strong focus on consumer protection. However, he raised concerns that the slow approval process might be driving crypto firms to seek faster approvals abroad, potentially threatening London’s competitiveness as a global crypto hub. Hillis also noted the positive trend of firms becoming more aligned with FCA expectations, which could help reduce approval times further.
