The Financial Conduct Authority (FCA), the top financial watchdog in the United Kingdom, has warned the crypto exchange FTX, which is domiciled in the Bahamas, that it is operating illegally. The business joined an expanding group of cryptocurrency-related enterprises that are not registered with the FCA, which continues to outnumber those that are.
The company "may be providing financial services or products in the UK without licence," according to a warning note dated September 16. The FCA warns prospective clients that "if things go wrong," they won't be able to get their money back or apply for the Financial Services Compensation Scheme's protection.
By the end of August, the list of crypto companies registered with the FCA included 37 entities, with the Crypto.com becoming the latest to join it. Other firms that managed to go through the registration process in 2022 to achieve Money Laundering Regulations approval were eToro UK, DRW Global Markets LTD, Zodia Markets (UK) Limited, Uphold Europe Limited, Rubicon Digital UK Limited and Wintermute Trading LTD.
New cryptocurrency-focused regulations were instituted in January 2020 to allow the FCA to supervise businesses operating in the space and enforce AML and counter-terrorism financing regulations. As the spokesperson for the FCA explained back in August: “Successful registration depends upon a firm meeting the minimum standards we expect to prevent money laundering and terrorist financing, and we have seen too many financial crime red flags missed by the crypto asset businesses seeking registration.”
Although there is no clear understanding of what the immediate repercussions for the unregistered entities might look like, the FCA is surely no vegetarian when it comes to enforcement. On Sept. 13, one of the largest electronic payment providers in the United Kingdom, ePayments, closed its business operations three years later after receiving a respective order from the FCA due to alleged weaknesses in its “financial crime controls.”
It isn’t the first time lately that FTX has caught the attention of the regulators. On Aug. 19, the Federal Deposit Insurance Corporation (FDIC) issued cease and desist letter for the company, alleging that it had misled the public about certain cryptocurrency-related products being insured by FDIC.