The UK's top financial watchdog said it has been tough on crypto firms seeking regulatory approval, regardless of their size or market share.
Nikhil Rathi, Chairman of the Financial Conduct Authority (FCA), told a parliamentary committee on Wednesday that the regulator has turned down applications from some of the world's largest crypto firms over the past two years.
The FCA opened crypto registrations in January 2020, requiring all crypto businesses operating in the UK to comply with money laundering and counter-terrorism financing rules. However, only 42 of the 300+ applicants have been registered so far.
Rathi said the FCA's decisions were driven not by anti-innovation sentiment but by its mission to provide clean markets and protect consumers.
“We've had a very tough time with this industry over the last 18 months or two because we've turned down applications from some of the world's biggest crypto firms,” he said.
“We didn't do this because we were anti-innovation, but because we were tasked with making sure money laundering standards were met and they couldn't convince us that they did, so we turned down applications because we want clean markets here.”
Rathi also cautioned against using market share as a criterion for granting regulatory approval, saying this would create a bias against large firms and hinder competition and innovation:
“There are some people who suggest that we measure market share, and I urge everyone to think carefully about whether you really want a regulator to mention such a benchmark because it will create a bias against big companies.”
*Not investment advice.