When it comes to understanding cryptocurrency regulations, few are aware of the correct terminology that indicates the company respects the highest standards of safety and security when it comes to your personal data and funds. In this piece, we’re going to break down the difference between what FCA registered and FCA authorised mean, and why it’s so important to distinguish the difference between the two.
The Financial Conduct Authority (FCA) is responsible for regulating all financial services industries across the United Kingdom. The organisation is in place to increase market integrity while protecting customers and promoting healthy competition. All investment firms, financial service providers and consumer credit firms are required to be authorised by the FCA, while banks, credit unions, and insurance companies must also be regulated by the Bank of England's Prudential Regulation Authority (PRA).
Through three arms of operation, the FCA’s main objective centres around ensuring customers’ protection is at the core of the financial institutions’ that they govern. The FCA is responsible for authorisation, supervision and enforcement, which covers:
“By regulating firms, the FCA protects consumers and allows them to have confidence in the services offered to them. This is important to the economic stability of the country, as consumer trust in financial services stimulates competition and growth.”
As cryptocurrencies entered the mainstream trading circles, the FCA expanded their services to include financial institutions proving crypto services. While the company is seen to have an “evolving approach” to cryptocurrencies, it has had to establish clear boundaries and ensure that proper anti-money laundering (AML) guidelines are in place.
In light of this, the organisation implemented a regulation that insists that all crypto-related companies in the UK need to be compliant with the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 and must be registered with the FCA by 9 January 2021. This deadline has since been moved out to March 2022 as many companies are not meeting the necessary guidelines and the intensive assessment is then delayed.
Once approved, this means that the FCA is confident that the company has processes in place that can identify and prevent anti-money laundering and counter-terrorist financing activities.
The difference between FCA registered and FCA authorised is whether the company passed the rigorous testing process and was approved. Some ill actors in the industry claim to be “FCA registered” which does not mean that they have complied with the FCA regulations, it simply means that they applied for it. Always ensure that the financial services firm you are engaging with has the FCA authorisation stamp of approval.
To give customers peace of mind when it comes to investing their money, the FCA authorisation ensures that firms are compliant with the strict outlines of the Financial Services and Markets Act 2000 (FSMA). In the crypto space, the regulatory requirements will change depending on whether the company is providing services pertaining to DLT (distributed ledger technology), Markets in Financial Instruments Directive (MiFID), or E-money. However, the process will remain the same and the criteria will need to be met.
In the case of crypto-related companies, they will also need to be compliant with the EU’s 5th Money Laundering Directive (5MLD) and the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017.
All firms seeking to obtain this recommendable level of compliance need to complete the application process after which they will be assigned a specific case officer. The case officer is then responsible for understanding the services provided by the company, and determining whether they meet the FCA requirements. Individuals in key roles within the company are also vetted to ensure that they are “fit and proper” to serve in this role. Once approved the companies are required to pay an annual fee and share ongoing reports on their operations.
Based in Gibraltar, which is a self-governing British overseas territory, Tap Global holds a licence from the Gibraltar Financial Services Commission which acts as the “FCA of Gibraltar.” Through a regulation process and ongoing monitoring, the organisation ensures that all financial institutions operating from that area meet the high standards and criteria, predominately focused on consumer protection, firm integrity and anti-money laundering practices.
Tap Global is an authorized DLT provider, licensed and regulated by the Gibraltar Financial Services Commission with license No. 25532.