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Many experts believe London is the world’s blockchain capital, which is not surprising because straightforward rules for regulating the crypto industry have been created here. A UK crypto license is simply a registration with the FCA under the AML/CTF regime. Registration is not usually called a license in itself. However, it can be considered a license since, without this registration, it is forbidden to provide certain services. Learn more about the VARA license process in Dubai and how it enables crypto businesses to operate legally under the Virtual Assets Regulatory Authority.
Some businesses require registration under the Money Laundering Regulations 2017 (MLRs 2017). Most of these activities require registration with the HMRC, not the FCA. For example, a real estate agency or company founder must register with HMRC. However, certain cryptocurrency transactions require registration with the FCA, and the registration process is very different from what a real estate agent must go through.
Do I need to register an FCA cryptocurrency outside the UK?
Firstly, you are a qualifying person and must register with the FCA if your registered office or head office is in the UK and the day-to-day management of your business is the responsibility of that office or other institution in the UK. Also, this applies if you have a UK cryptocurrency ATM. Even if you or your company is from Delaware, one tiny crypto ATM somewhere in London will be enough to make you an eligible person under the UK Anti-Money Laundering/Terrorist Financing regime, which requires FCA crypto registration for a UK ATM to operate.
My company has a cryptocurrency license from another EU member state. Do I need to register in the UK?
If you own one of the thousands of companies with an Estonian cryptocurrency license, you may have this question. If this is the case, you must understand that registration is not authorization to provide financial services, and there is currently no such thing as an EU passport for activities. However, this does not mean that you must register in the UK unless your company is based in the UK and provides cryptographic services as a business.
Do I need an FCA anti-money laundering license for assets if my firm is authorized under the Financial Services and Markets Act 2000?
Yes, it would be best if you still had it. Even if the FCA and PRA regulate your firm, the MLRs 2017 Cryptocurrency Regulations require you to obtain a Cryptocurrency Asset Authorization from the FCA in addition to your existing regulatory approvals. Therefore, a company must apply for a UK Cryptocurrency License, even if it is a bank, investment firm, or company with a UK Electronic Money or PI license.
What types of services are subject to registration?
Only crypto asset exchange providers and custodial wallet providers require FCA registration. You must indicate this on your FCA application if you provide both services. In any case, one license is valid for both types of crypto-activities.
Before we explain to you the two categories of activities subject to registration, we want to ensure you understand which crypto assets are regulated by the FCA Crypto AML/CTF regime.
Which assets are regulated by the FCA anti-money laundering regime?
The definition of a crypto asset in MLR is quite broad. It is a cryptographically protected digital representation of value or contractual rights operating in the form of DLT, including blockchain, that can be transferred, stored, or traded electronically.
JMLSG notes that the definition of crypto assets is broad enough to include even in-game currencies. Suppose you are a company that issues an in-game cryptocurrency. In that case, you should consider whether it can only be used within a specific game or whether the in-game cryptocurrency can be exchanged for the value accepted outside the gaming environment. The same applies to utility tokens and closed-loop tokens such as loyalty or reward tokens.
What is a crypto asset exchange provider?
A UK crypto exchange license is required for individuals and legal entities who professionally:
- сapable of exchanging or arranging or negotiating to exchange crypto-fiat and fiat-to-crypto;
- exchange or arrange or enter into arrangements to exchange cryptocurrencies for cryptocurrencies;
- operate an automated machine that exchanges cryptocurrency for fiat and fiat for a cryptocurrency (crypto ATM).
The above categories are also quite broad. For example, an issuer exchanges its tokens for another cryptocurrency or fiat currency during an ICO.
