Whales and minnows join UK cryptoasset boom

From billion-pound businesses to sole traders, UK entities large and small are seeking to capitalise on the cryptoasset boom.

Last week the UK financial markets regulator, the Financial Conduct Authority (FCA) revealed it had been overwhelmed by a surge of applications by cryptoasset firms seeking to register with it ahead of a December deadline to comply with new anti-money-laundering rules.

Only three firms have so far made it to the full register, with over 100 other applicants placed into a temporary registration regime that allows them to carry on their business for another six months.

Three types of business need to register with the FCA to carry on cryptoasset activity in the UK: those exchanging cryptoassets for money or another cryptoasset; those operating machines like ATMs that perform these services; and those providing custodial services for cryptoassets (or for the private keys that confer ownership of cryptoassets).

It is now a criminal offence to perform any of these activities in the UK without registering with the authorities.

The temporary register reveals a startling cross-section of businesses

The temporary register of cryptoasset firm applicants published last week by the FCA reveals a startling cross-section of businesses, from firms with tens of millions of clients to single-director companies with no trading history.

The FCA’s registration regime has two levels of fees: £2,000 for businesses with UK cryptoasset income up to £250,000 and £10,000 for businesses with UK cryptoasset income greater than £250,000.

Amongst the most prominent applicants are cryptoasset exchanges and fintech firms such as Bitstamp, Blockchain.com, eToro, Galaxy, Huobi, Kraken and Revolut.

Several of these enterprises are in the ‘unicorn’ category of private firms with valuations exceeding $1bn, while all boast over 100,000 Twitter followers.

Blockchain.com, for example, says it has over 65 million users of its cryptoasset wallets and has transacted in more than $6.4trn of cryptocurrency.

A notable absentee from the list is Binance, reportedly the world’s largest cryptocurrency exchange.

Last year Binance purchased a UK entity to obtain FCA authorisation, while announcing it intended to serve UK institutional and retail clients wanting to trade cryptoassets.

The firm declined to answer a question about why it was absent from the temporary FCA register. Its website for UK customers says its services will be launched soon.

The FCA’s temporary cryptoasset register also includes some well-known names from the world of traditional finance, including DRW Markets, a proprietary trading firm that reported nearly $400m of UK revenues in its last annual accounts, and Fidelity, a US-based asset manager with over $3trn under management and a long-standing interest in cryptocurrency.

At the other end of the scale are UK firms seeking authorisation to run networks of ATMs, sometimes consisting of just a few machines.

For example, Satoshi ATM UK Limited, run by pub landlord Wendy Bishop, operates 3 bitcoin ATMs in Devon and Hampshire, in the south-west of England.

Misoneism Limited boasts of running “the only two-way Bitcoin ATM in Wales”

“Wendy’s day job is the landlady of an extremely successful pub where one of the ATMs is placed,” the company’s website states.

“Rob, her husband, first got involved in cryptocurrency when he attended a meeting where he received £5 worth of bitcoin for attending. Wendy has run the Bishop Lacy pub for the past 25 years. She also has the accolade of having the oldest building in the world to host a crypto ATM,” the website says.

Another registrant, Misoneism Limited, owned by Mr. Simon Miles of Merthyr Tydfil, boasts of running “the only two-way Bitcoin ATM in Wales”.

Specialist digital asset custodians on the temporary FCA register include Copper Technologies (UK) Limited, which provides inter-exchange custody services, Digivault, which says it provides institutional investors with a solution that makes digital asset storage simple and secure, and Trustology, provider of an insured custodial wallet allowing individuals and institutions to safeguard digital assets “on-chain, on-exchange and across DeFi”.

Many of the firms on the FCA temporary register specialise in developing payment apps to allow the exchange of cryptoassets using mobile devices.

Zumo, for example, developed by Blockstar Developments Limited, is an app providing a non-custodial wallet that seamlessly connects crypto and traditional currencies, the firm says.

Revolut describes itself as offering “one app to manage all things money”.

And the Baanx app promises offer “a complete range of services that allow you to go far and beyond”, including buying and selling cryptocurrencies at the best prices, sending them to other platform members free of charge, storing them and spending them seamlessly in over 45 million stores in the world using an associated debit card.

Not everyone on the temporary FCA register is seeking to capitalise on the latest cryptocurrency price boom, however.

Scotcoin, a community interest company (CIC), a special type of limited company that aims to benefit the community rather than private shareholders, says its goal is to distribute a new digital currency—Scotcoin—to the people of Scotland and to inform the country’s population about its activities.

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