How to register as a cryptoasset business

To legally operate a cryptoasset business in the UK, you must apply for registration with the Financial Conduct Authority (FCA) before you begin trading. This is a rigorous process designed to ensure your business has robust systems in place to prevent money laundering and terrorist financing. Unlike standard business registrations, the FCA will deeply scrutinise your business plan, your owners, and your internal controls before allowing you to enter the market.

Does this apply to you?

The requirement to register applies to any business operating in the UK that carries out 'cryptoasset activities.' Generally, this falls into two main categories:

• Cryptoasset Exchange Providers: This includes businesses that exchange fiat currency (like GBP) for cryptoassets, exchange one cryptoasset for another, or operate a machine that facilitates these exchanges (such as a crypto ATM).
• Custodian Wallet Providers: This includes businesses that look after cryptoassets on behalf of customers or manage the private cryptographic keys required to hold and transfer those assets.

If your Fintech involves either of these, you must register under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.

The cost of registration

The FCA charges a non-refundable application fee. The amount you pay depends on the income your crypto business expects to generate:

It is vital to ensure your application is high-quality before submitting, as the fee will not be returned if your application is rejected or if you withdraw it because it wasn't ready.

The registration process

The application is submitted through the FCA’s online portal, Connect. You will need to provide a comprehensive package of information that proves your business is ready, willing, and organised.

1. Prepare your documentation

The FCA expects to see a professional level of documentation. This includes:

• Business Plan: A detailed breakdown of your business model, target customers, and growth strategy.
• Structural Information: Details of your legal structure and proof of who owns and controls the business.
• AML/CTF Risk Assessment: A document showing you understand the specific money laundering risks your business faces and how you plan to mitigate them.
• Internal Controls: Your policies for monitoring transactions and reporting suspicious activity.
• IT Systems and Governance: Information on how you secure your platform and protect customer data.

2. The 'Fit and Proper' test

The FCA will assess whether the people running the business are 'fit and proper.' They will look at your skills, experience, and integrity. This involves background checks, reviewing CVs, and ensuring that those in key positions have the necessary knowledge of UK anti-money laundering requirements.

3. Submission and Assessment

Once you submit your application via Connect, the FCA will assign a case officer. The statutory deadline for the FCA to make a decision is usually three months from the point they receive a 'complete' application. However, if your application is missing information, the process will take significantly longer. Be prepared for the FCA to ask multiple rounds of detailed questions.

Best practices for a successful application

The FCA has a very high bar for cryptoasset registrations, and many applications are rejected or withdrawn because they are not 'ready, willing, and organised.' To increase your chances of success, follow these tips:

• Avoid 'off-the-shelf' policies: Do not use generic templates for your anti-money laundering manuals. The FCA wants to see that your policies are tailored specifically to your technology and your customers.
• Be transparent: Disclose everything. If the FCA discovers information about your business or its owners that you didn't disclose, it is highly likely your application will be rejected on the grounds of integrity.
• Explain your technology: If you have a unique way of managing custody or exchange, explain it in simple, clear terms. Don't assume the case officer is an expert in your specific technical niche.
• Test your controls: Before applying, make sure your software and internal processes actually work as described in your manuals.

Note: This registration is specifically for money laundering supervision. It is not the same as 'Full Authorisation' for other financial services. If you also plan to offer regulated services like payment processing or consumer credit, you will likely need separate permissions.