Information on enforcement investigations and authorisations applications concerning Crypto- December 2022

Reference Case Number: FOI9674

Freedom of Information: Right to know request:

1. For both the years 08/2020-08/2021 and 08/2021-08/2022, please provide the number of open enforcement investigations which are related somehow to crypto (for example, a crypto business line or financial promotions relating to crypto) and the number of investigations closed during the same period. Please provide a breakdown of the information by individual/firm, by type of firm (eg, bank, asset management firm, etc) and by the Principle(s)/rule(s) to which the investigations relate.

2. For the period 01/2021 to as recent as available, please provide the number of crypto businesses that have submitted applications for registration and the number of applications that the FCA has rejected.

3. For the period 11/08/2022 to the date on which this information request is processed (or as recent as available), please provide the number of crypto change in control notifications received (and, if any data is available, the number rejected).

FCA response:

Question 1

For the period which you specified, there were no open Enforcement investigations relating to cryptoassets. During this same period, there were no Enforcement investigations relating to cryptoassets which were closed.

It should be noted that investment in cryptoassets is not a regulated activity. Cryptoassets and cryptoasset-related activities sit largely outside the regulatory perimeter. In the context of the largely unregulated nature of cryptoassets, where you refer to ‘investigations’ we take this to mean ones in which FCA investigators have been formally appointed under section 168 of the Financial Services and Markets Act 2000 (FSMA). On this basis, we have not opened investigations into any firms for engaging in such activities without FCA authorisation. This is because in order for the FCA to be able to take regulatory action, a firm would need to be engaging in activity within our remit and in breach of the MLRs or FSMA.

Question 2

The requirement to register with the FCA for businesses carrying out cryptoasset activities in the UK came into effect on 10 January 2020 under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (‘the MLRs’). Between January 2021 and 24 November 2022, we received 105 applications for registration. Overall, we received 300 applications between January 2020 and 24 November 2022.

During the period January 2021 to 24 November 2022:

We rejected 36 applications.
153 firms withdrew their applications. Common reasons for doing this include:

Not having all the information we require and consequently deciding to resubmit an application later.
Not meeting the perimeter of carrying on business in the United Kingdom as defined under regulation 9[1] of the MLRs.
Not meeting the definitions of a cryptoasset exchange provider and/or custodian wallet provider as defined under regulation 14A[2] of the MLRs.
Understanding that registration is likely to be refused.
Otherwise not meeting the requirements of the MLR

Question 3

In the specified period, we received 3 change in control notifications; none were rejected or refused.

In respect of these notifications, one is being assessed, one has been withdrawn, and one relates to an acquisition of control over a firm which is carrying out cryptoasset activities alongside other regulated activities. The acquisition of control took place before the firm was registered for cryptoasset activities and, consequently, is in respect of the firm’s FSMA permissions only. The notification was submitted after the transaction has taken place.

Date of Release: 01/12/2022