- PayPal has obtained registration with the UK’s FCA for its crypto services, allowing it to resume its operations
- The UK established its crypto registration system in 2020 and has now started enforcing its rules
- PayPal halted crypto trading in August as it adjusted to the new laws
PayPal is now registered with the UK’s financial watchdog, the Financial Conduct Authority (FCA), for its crypto activity, meaning it can now look into restarting its crypto operations in the country. The registration comes two months after the payments giant halted its UK crypto operations, citing the UK government’s more stringent crypto regulations, although it always intended to return. The same regulations have led to difficulties for the likes of Binance, which has struggled to obtain the same level of clearance, while 146 crypto companies failed to register in time, meaning that they are now in contravention of the law.
PayPal Does What Binance Can’t
The UK’s crypto registration system was set in motion in 2020, coinciding with the introduction of the Fifth Money Laundering Directive (AMLD5). As part of this directive, companies seeking to operate in the UK crypto space must notify the FCA and obtain the watchdog’s approval to do so. These regulatory adjustments also aim to restrict unregistered entities from enticing British residents to invest in cryptocurrencies, aligning with the rules governing traditional financial products.
Furthermore, the FCA necessitates that all marketing materials, regardless of a firm’s registration status, must be approved before they can be published. This has led to problems for Binance which is still looking for an FCA-compliant crypto marketing company and has had to halt the acceptance of new UK customers while it does. Non-compliance with these rules carries severe consequences, as the FCA emphasized in a press release, warning that violators may face criminal charges, including unlimited fines and imprisonment for CEOs.
Crypto Services Can Now Reopen
In August, PayPal announced the temporary suspension of its UK-based crypto services until 2024 in line with the UK’s efforts to fully enforce the “Travel Rule,” which encompasses essential Know-Your-Customer and Anti-Money Laundering regulations outlined by the Financial Action Task Force. As of September 1, 2023, all crypto firms registered with the FCA must adhere to the Travel Rule following the government’s directives resulting from legislative amendments in July 2022.
The objective of this new legislation is to transform the UK into a fully regulated and secure hub for the cryptocurrency sector, promoting transparency and investor protection, with new overarching regulations assisting in achieving this.
