UK Crypto Firm Chief Warns Country Could Fall Behind EU in Innovation and Licensure

The head of the UK’s biggest crypto company has accused the country’s finance watchdog of stifling innovation, suggesting Britain will fall behind its EU rivals as a consequence.

Peter Smith, CEO of Blockchain.com, told The Telegraph that the Financial Conduct Authority (FCA) has taken a “risk-management first approach” that comes “at the expense of innovation.”

“I think the UK has definitely fallen behind over the last two or three years. The FCA, of late, hasn’t been eager enough to foster innovation and to work with the industry,” he said.

Smith praised regulators in Ireland and Germany for creating frameworks and licenses that allow companies to operate more efficiently.

Blockchain.com is reportedly seeking to raise funds that value the business at $20B. Last March, it was valued at just $5.2B.

The company is best known for its open-source, non-custodial wallet that allows users to buy, sell and store cryptocurrency. The company claims to have over 76 million users and has processed over a trillion dollars’ worth of transactions — accounting for a third of all bitcoin spending. 

The FCA has launched a number of crackdowns in the last 12 months, requiring cryptocurrency brokers to join a register and agreeing to meet strict anti-money laundering (AML) requirements.

Nearly 100 cryptocurrency companies are still awaiting approval to operate in the UK and have until March 31 for a decision. If not, they may be forced offshore. Only six have won full approval so far. More than half of the 152 companies that have applied have either been rejected or forced to withdraw.

Of the number, 27 are operating under temporary permission and 69 have applications pending.

The undecided applicants include big names like challenger bank Revolut, which has succeeded in winning EU AML approval, but not, as yet, at home.

Peter Smith is the latest industry figure to question the UK’s commitment to cryptocurrency adoption.

Philip Hammond, the country’s former finance minister, recently warned that the UK was “manifestly behind the curve” when it came to clear regulation of cryptocurrency. 

He added that UK policymakers needed to shift “from talking about digital assets to implementing a legal framework that enables firms to embrace them.” 

More than 2.3 million people in the UK already own cryptocurrency, according to the FCA.