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Regulation

UK FCA establishes temporary crypto registration regime due to backlog

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The United Kingdom’s Financial Conduct Authority has issued temporary registrations to crypto-asset companies that have already submitted applications but not yet been processed.

According to a Dec. 16 announcement, this will allow the companies to continue trading for an extended period until July 9, 2021, following the initial registration deadline of Jan. 10, 2021.

As Cointelegraph reported, the FCA became the supervisor of Anti-Money Laundering and Counter Terrorist Financing measures for crypto firms in the United Kingdom on Jan. 10, 2020.

From this date, all such companies have had to comply with AML regulations, with a requirement that they be registered by Jan. 10, 2021.

However, due to issues with site visits during the pandemic and what it describes as “the complexity and standard of the applications received,” the FCA has so far not been able to process all of the applications.

It has therefore issued temporary registrations to all businesses that submitted an application before Dec. 16, providing an additional six months to process them. The extension only applies to firms that were doing business prior to Jan. 10, 2020, while any new company will require a full registration.

One firm that has received a temporary registration commented on the lack of clear requirements being an issue when filing its original application. Sergey Zhdanov, chief operating officer of Exmo, added:

“We have some experience in getting an AEMI license (electronic money institution). It’s not exactly a piece of cake, but during that process the FCA tells you what is wrong or right and what you need to improve to get the license. Here we didn’t have that luck.”

The FCA is advising all customers of crypto asset firms to check whether the firm is on the register, has temporary registration or can continue to trade due to being registered in a different country.

Any company not falling into one of these categories will be operating illegally if it continues to trade after Jan. 10, 2021, so customers are advised to withdraw both crypto assets and money from such businesses before this date.

In October of this year, the FCA enacted a ban on all cryptocurrency derivatives products, such as futures, options and exchange-traded notes to retail customers due to the alleged “harm they pose.”



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Regulation

New York authorizes first Yen stablecoin operator in the US

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New York has given the first authorization to a stablecoin backed by the Japanese Yen to operate in the U.S.

Per a Dec. 29 announcement, the New York Department of Financial Services has granted Japanese firm GMO-Z.com a charter to handle U.S.D. and Yen-backed stablecoins in New York. 

Given New York’s status as a global center, the NYDFS is the most prominent state financial regulator in the U.S. It is also one of the most aggressive. A pass to operate in New York often opens up the rest of the country. 

GMO’s charter is as a limited liability trust company rather than a full bank, the principle difference being in authorization to handle deposits. While a stablecoin operator typically needs the ability to hold reserves of the pegged asset, GMO’s charter limits its rights to hold other kinds of deposits not central to its ability “to issue, administer, and redeem” its stablecoins. 

The right to issue such non-depository charters has been a bone of contention between state regulators like the NYDFS and national banking regulators in the U.S. 

GMO president and CEO Ken Nakamura said: “We’re breaking ground with our move to issue the first regulated JPY-pegged stablecoin, which many see as a safe haven asset.” 

The NYDFS recently made changes to its famous BitLicense, including a conditional format that buddies up newly licensed firms with existing licensees. The first conditional BitLicense went to PayPal, facilitating the launch of its new crypto services earlier this fall with the help of longstanding licensee Paxos.