While global authorities are on their toes, FCA, the British financial watchdog, also remains active due to the risks involved in cryptocurrencies.
On Friday, Financial Conduct Authority (FCA) issued a note to highlight unauthorized business companies operating in the UK. The announcement hit the Sam Bankman-Fried-led exchange, FTX, and declared the platform offers service without getting authorization from the authority.
The notice reads:
This firm is not authorised by us and is targeting people in the UK. You will not have access to the Financial Ombudsman Service or be protected by the Financial Services Compensation Scheme (FSCS), so you are unlikely to get your money back if things go wrong.
The Bahamas-based crypto exchange did not come under the radar of the UK’s authorities for the first time. However, the country’s Federal Deposit Insurance Corporation (FDIC) alleged the firm in August to mislead investors about several crypto-related products insured by the FDIC. The federal agency sent cease and desist letter to FTX meanwhile.
Notably, the company receives warnings even though it has earned rights from Cyprus Securities and Exchange Commission (CySEC) to operate in the European Economic Area (EEA).
FTX Revenue Jumped Unexpectedly
On the other hand, leaked financial documents of the company cast doubt upon the platform. The FTX generated around $1.2 billion through its global trading revenue in 2021, more than ten times compared to its previous year’s revenue of $89 million. Moreover, the firm likely hit $272 million in operating revenue from the previous year’s uptrends in crypto prices. In comparison, it recorded only $14 million in annual revenue before 2021.
The question that puts one into thought is crypto market remained bullish from 2020 to the first quarter of the following year. However, it favors the higher income figures of FTX, how it managed to increase revenues in the second quarter when crypto winter shackled the entire market.
FCA Esatblishes Tightens Crypto Regulations
The government agency became a leading role in crypto regulations in January 2020. And every financial business company operating in the state is liable to register with the authority, per the notice.
It registers firms taking money laundering and other terror financing activities into account and applies regulations accordingly. The growing number of illicit funds transfers in crypto initially pushed the authority to supervise crypto-oriented businesses.
The financial watchdog enforces stricter regulation, and nearly 70 business companies have withdrawn their requests for approvals as the FCA didn’t recognize their business’s infrastructure as transparent. Similarly, around 37 new firms achieved Money Laundering Regulations approvals till August of 2022. Still, the 200 companies that applied for approvals are currently being explored by FCA.
And the most recent company that fulfilled the requirement of the financial agency is Blockchain.com. Other entities authorized to offer services includes eToro UK, Wintermute Trading LTD, Zodia Markets (UK) Limited, DRW Global Markets LTD, Rubicon Digital UK Limited, and Uphold Europe Limited.
Featured image from Pixabay and chart from TradingView.com