The UK is determined to become a major cryptocurrency player. However, it faces an unexpected obstacle: its slow regulatory procedures.
Indeed, the Financial Conduct Authority (FCA), the UK’s financial regulator, takes more than a year on average to process registration applications from cryptocurrency companies.
Delays Dampen Business Enthusiasm
According to a recent study by law firm Reed Smith, waiting times for licensing in the UK’s crypto-asset sector are excessively long.
This slowness has the direct consequence of discouraging many companies. They prefer to set up in countries with faster procedures and clearer regulations.
The consequences of these delays are manifold. Loss of competitiveness is one of them. The UK risks losing its position as a European cryptocurrency hub to other, more attractive countries.
Legal uncertainty is another consequence. Companies are faced with doubts that are holding back investment and innovation.
We can also cite the decline in applications for registration. The number of applications for registration with the FCA is plummeting. This is a sign that companies are desperate to obtain authorization within a reasonable timeframe.
Several factors explain this slowness, such as the complexity of regulations. The cryptocurrency sector is constantly evolving, making it difficult to draw up clear, precise rules.
Lack of resources is also a source of slowdown. The FCA may not have sufficient staff to process all applications in a timely manner.
The agency could also give higher priority to other financial sectors, to the detriment of cryptocurrency.
A Situation that Could Change
Although the situation is worrying, it is important to note that the FCA has taken steps to speed up the processing of applications.
In addition, the agency has published new guidelines and simplified certain procedures. However, these efforts are not yet sufficient to significantly reduce waiting times.
To regain its competitiveness in the cryptocurrency sector, the UK needs to take more ambitious steps.
For example, it could simplify registration procedures. Cutting red tape and clarifying regulatory requirements would be a good start.
The FCA’s resources should also be strengthened. Giving the agency the resources it needs to process applications quickly would be one way forward.
It is also crucial to foster ongoing dialogue between the regulator and market players. Setting up working groups would enable the regulatory framework to be rapidly adapted to the constant evolution of the cryptocurrency sector.
All this while guaranteeing a high level of protection for investors.
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