Yahoo Finance FCA warns 'a significantly high' number of crypto firms not meeting anti-money laundering rules
The UK’s Financial Conduct Authority (FCA), which has previously warned on the risks of investing in cryptoassets, has said a huge chunk of firms providing these services are failing to meet its anti-money laundering rules.
"A significantly high number of businesses are not meeting the required standards under the Money Laundering Regulations resulting in an unprecedented number of businesses withdrawing their applications," it said in a statement.
It has extended a deadline for cryptoasset firms to prove that they are able to meet these requirements from 31 March to 9 July.
In the meantime they can keep trading, and the FCA will continue with its "robust assessment."
"Anti-money laundering and counter terrorist financing legislation are aimed at protecting against enabling the transfer and disguise of funds from criminal activity, or funding of terrorist groups," it said.
"While this is not the only element that the FCA will assess in relation to an applicant, the FCA will only register firms where it is confident that processes are in place to identify and prevent this activity," its statement added.
Watch: Ethereum Co-Founder: Dogecoin has no user utility right now
Read more: Dogecoin continues to rally as bitcoin picks up off its lows
Back in January the regulator had issued a statement warning people about the risks of putting their money into cryptoassets such as bitcoin.
"Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money," the FCA had said. "If consumers invest in these types of product, they should be prepared to lose all their money."
In its latest announcement it reiterated these risks, and said the FCA does not have consumer protection powers for the cryptoasset activities of firms.
It said in case an issue arises, it is unlikely that consumers will have access to The Financial Ombudsman or Financial Services Compensation Scheme, regardless of whether a firm has temporary or full registration.
Countries around the world are taking note of the popularity of cryptos.
Last month cryptocurrencies crashed after Chinese vice-premier Liu Hu said China would "severely crack down on illegal securities activities and severely punish illegal financial activities."
He promised a "crack down on bitcoin mining and trading" as part of China's plans to "prevent and control financial risks."
Both bitcoin (BTC-USD) and ethereum (ETH-USD) have pared their losses since, but remain far from their all-time highs.
And Dubai has issued a scam warning to investors, after a cryptocurrency called DubaiCoin caused a stir for claiming it was "the official digital currency of Dubai."
Watch: What are the risks of investing in cryptocurrency?
