Checking FCA Crypto Registration
Want to deposit on a new crypto platform but unsure if it's legitimate? FCA registration is a minimum signal of compliance, but it doesn't guarantee safety. Here's what UK crypto investors need to know.
What FCA crypto registration actually is
In the UK, firms that offer cryptoassets such as Bitcoin, Ethereum or stablecoins to UK consumers must be registered with the Financial Conduct Authority (FCA) for anti-money-laundering (AML) purposes.
This registration is not the same as the FCA's full authorisation for more regulated financial activities. Instead, it is a base level of oversight for firms that fall under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
How crypto promotions are regulated
Since 8 October 2023, firms promoting cryptoassets in the UK must be either FCA-authorised, or registered with the cryptoasset regulatory regime, or have their marketing approved by an FCA-authorised firm.
These financial promotion rules for cryptoassets became law in June 2023 with PS23/6. Of particular note is the required warning "Don't invest unless you're prepared to lose all the money you invest.
This applies not just to cryptoasset companies but also to firms approving promotions, with the February 2024 rule mandating specific FCA permission.
What the check should look for
Given the range of regulation and the risk, do your own due diligence when vetting a potential crypto engagement. To start, ask whether the firm's FCA registration is just for anti-money-laundering purposes, or if you are tying up with an actually FCA-authorised firm. The FCA recently added cryptoasset financial promotions to the Financial Conduct Authority Handbook's Conduct of Business 4: Communicating with Clients, Including Financial Promotions.
If you find it only in the cryptoasset registration list, rather than actually listed - make sure it is not a clone firm.
What the check does not prove
It's important to note that FCA registration for anti-money-laundering purposes does not cover all the protections available to consumers under the Financial Services Compensation Scheme or via the Financial Ombudsman Service.
FCA says loud and clear, crypto investment into unregulated entities is not protected by a blanket guarantee from the UK FCA like in other investment venues: "Don't invest unless you're prepared to lose all the money you invest.". This is a high-risk investment and you should not expect to be protected if something goes wrong."
Why clone-firm checks matter
At the extreme, an investor could tie up with a counterfeit firm that has stolen the name of an FCA-registered firm. These are also known as "clone firms".
General information, not financial, investment or tax advice. Rules, fees and allowances change: check the figure with HMRC, the FCA or the service itself before you act.
