The UK is one of the few countries contributing to the crypto industry’s development. It wants to become a significant technological crypto center, where many exchanges, wallets, and other organizations that want to make money on crypto assets will be concentrated. To achieve its goals, this country establishes pretty simple rules for regulation; for example, there are no requirements for a crypto broker license, as this is advisory.
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How is the crypto sphere developing in the UK?
This country is a large crypto center where many exchanges, wallets, and other companies operate. About a hundred major crypto events occur in London every year, and in terms of their number, it only competes with New York. As a result, a prominent crypto community has emerged here, which allows enthusiasts to quickly find business connections, search for qualified employees, and exchange ideas, which gives the industry a faster development.
According to the government, stablecoins today have every chance of becoming a widespread means of payment, and it does not intentionally interfere with this process. Also earlier, the Deputy Governor of the Bank of England proposed to regulate crypto assets by analogy with traditional finance.
Now you can use crypto assets to buy or sell goods and services, provided both transaction members agree. However, if they are regulated by analogy with traditional finance, then most shops and companies. Those who offer such services will be more willing to accept this as a payment method.
As this industry develops, there is a growing need to regulate this to protect users from scammers. At the moment, the government of the country has not set complex requirements for crypto organizations, but experts say that this cannot last too long. Now, this issue is being actively discussed, and shortly, we can see new legislative acts regulating the crypto sphere.
Licensing features
Most countries either ban crypto assets altogether or require companies that make money in this industry to obtain a license. In the UK, the permit is advisory, so many have yet to abandon this idea. However, your company must be registered in this jurisdiction and pay taxes regularly.
Also, government agencies have created the Innovation Hub platform, where participants in the crypto business can receive legal support. It is very convenient if you want to function honestly, openly, and within the law, then you can receive qualified assistance. To learn more about getting a cryptolicense, click here.
Classification of crypto assets
Each country decides how to perceive cryptocurrencies from a legal point of view. For some, this is electronic money; for others, goods, then the UK qualifies them as crypto assets. This jurisdiction distinguishes 3 types of assets:
- Exchange tokens;
- Tokens with properties of securities;
- Utility tokens.
Exchange tokens are most commonly referred to as cryptocurrencies. These include Bitcoin, Ethereum, Litecoin, and many others. Usually, they are used to pay for goods and services, as well as for trading. Such transactions take place without the participation of banks.
Tokens with the properties of securities are a kind of investment that allows their owners to receive certain dividends. It may entitle you to a share of the profits or a share in the organization.
Utility tokens are created to access specific platforms or services, but they can later be used to perform financial transactions.
Some assets can combine the functions of several tokens at once. In this case, it can be challenging to figure it out. If you want to know more about this, you can contact our specialists.
What requirements must companies meet to operate in this jurisdiction?
The government of this country does not set large requirements for a crypto organization. However, they are required to comply with the AML/CTF policy. Government agencies want to ensure that crypto organizations are not used for money laundering or financing terrorism.
So, you must verify your clients and save all information about transactions. You cannot perform anonymous transactions. You should report it to government authorities as soon as you notice suspicious activity. Your company should employ a specialist who will monitor compliance with the requirements to prevent money laundering. They should monitor not only customers’ actions but also their employees’ work. Such a specialist must have a specialized education, work experience in the relevant position for at least a year, and an impeccable reputation.
Crypto organizations that want to operate in this country legally must register in this jurisdiction. Also, it would help if you had a local office and staff (Director and Anti-Money Laundering Specialist must have local citizenship). The choice of specialists must be approached incredibly responsibly. So, they must have good qualifications, extensive experience in similar positions, and an excellent reputation. None of your team members must have a criminal record. Reputation is everything.
At the same time, unlike other countries, there are no requirements for authorized capital in the UK, so this jurisdiction is suitable for both large corporations and small start-ups.
Main reasons for rejection
There are several reasons why government agencies may refuse to register you. Among the most important of them are the following:
- Unviable business plan;
- You do not adequately comply with anti-money laundering requirements;
- You do not take into account all the risks;
- You have not provided a complete list of documents.
The license in this jurisdiction is perpetual, but you can lose that if you comply with all the requirements of the state regulator, you can lose your work permit.
Guide information
You must provide regulatory authorities with information about all members of your team – skill level, work experience, criminal record, and so on. If you change any specialists, you must report this to the state authorities. Otherwise, you may lose your work permit.
Business plan
Your organization should have a well-thought-out business plan describing all aspects of your organization’s operations, from funding to the services you want. When the experts study the business plan, they should see that you understand how your company will function, can correctly assess all the risks, and find the necessary funding.
The business plan for FCA is slightly different from the standard investor document. Here you need to pay special attention to consumer protection and the fight against money laundering.
Management of risks
Before you begin work, you must study the possible risks and consider how to deal with them. Please engage an independent expert who will tell you what difficulties you may face and how your company should act to protect its consumers.
Anti-money laundering
You have already discussed the fight against money laundering in this article, but this aspect is important for regulators, so it makes sense to discuss them again. Your company must comply with anti-money laundering laws flawlessly. To do this, you must verify clients, avoid anonymous transactions, and store all information about clients and transactions.
To ensure that your company complies with all the requirements on this issue, it is better to contact an independent expert.
Conclusions
There currently need to be well-thought-out rules for regulating the crypto industry in the UK. However, every organization must comply with the requirements for combating money laundering and financial terrorism. If you want to work legally in this country and thrive, you need to go through a small check and registration. It will allow you to avoid legal problems and attract new investors and clients.