FCA elaborates on fees for UK cryptoasset businesses
The UK Financial Conduct Authority (FCA) today published a consultation paper (CP) setting out its proposed policy changes to the way it will raise FCA fees from 2021/22.
Since January 10, 2020, the FCA has been responsible for supervising, under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR), cryptoasset businesses which provide cryptoasset exchanges and custodian wallets.
UK cryptoasset businesses carrying on activities under the MLRs have until January 10, 2021 to register with the FCA or cease cryptoasset activity. The application fees have been in place since January 2020 and are contributing towards the recovery of the FCA project set-up costs.
The FCA bases cryptoasset business’ fees on income from the cryptoasset activities that it supervises under the MLR (ie income from the provision of cryptoasset exchanges and custodian wallet services only). As is the case with most of the fees the FCA charges under FSMA, businesses with up to £100,000 of income would pay minimum fees only. Businesses with incomes above £100,000 would pay the minimum fee plus a variable rate.
The FCA will consult on the fee-rate for 2021/22 in its annual Consultation Paper on FCA fee-rates in April 2021 and will finalise the charges in a policy statement in July.
Using the data currently available to the FCA, the regulator expects the rate will be around £10 per £k of supervised cryptoasset income above the minimum fee threshold of £100,000.
When the FCA set out its approach last October in CP 19/29, it explained that most FSMA fee-blocks had a minimum fee of around £1,000. Since then, however, the FCA’s experience of processing applications from cryptoasset businesses since January has highlighted the high risks presented by this sector. That is why, the FCA has concluded that a minimum fee of £2,000 would represent a more realistic contribution towards the recovery of its costs from the smaller businesses. Invoices will be issued between July – October.
The changes would take effect from April 1, 2021 so would not affect businesses currently trading, which must register with the FCA by 10 January.
Let’s recall that the FCA has recently announced a ban on CFDs on cryptocurrencies. The ban will come into effect on January 6, 2020.