Cryptoasset businesses
UK cryptoasset exchange providers and custodian wallet providers must register with the FCA under Regulation 57 of the MLR 2017 before carrying on business, and are held to the same substantive AML standard as authorised firms.
Where the regime bites
The FCA's cryptoasset registration regime is a purely AML/CTF gateway — it is not authorisation for prudential or conduct purposes. Registered firms must comply with the full MLR 2017, the Travel Rule regime introduced from 1 September 2023, and the FCA's financial promotions regime for qualifying cryptoassets.
The FCA's public feedback on the cryptoasset register consistently cites weak firm-wide risk assessments, unclear source-of-funds/source-of-wealth frameworks and inadequate blockchain analytics governance as reasons for refusal.
What supervisors expect
Complete registration before any regulated activity, including a business-wide risk assessment, policies suite, MLRO and BOOM fit-and-proper submissions.
Transmit and receive originator/beneficiary information for qualifying cryptoasset transfers under the amended Money Laundering Regulations, with jurisdictional risk-based decisioning for non-compliant counterparties.
Documented use of on-chain analytics for wallet screening, exposure scoring and typology detection (mixers, darknet markets, sanctioned wallets).
Compliance with the cryptoasset financial promotions regime, including risk warnings, personalised risk assessments and 24-hour cooling-off for first-time investors.
Recurring risk indicators
- Exposure to mixers, tumblers and privacy coins
- OFSI-designated and OFAC-designated wallet exposure
- Peer-to-peer ramp arrangements circumventing CDD
- Rapid deposit-and-withdraw layering across chains
- Non-compliant Travel Rule counterparties
Advisory support for the sector
- Regulation 57 application support
- Travel Rule policy and vendor selection
- On-chain risk framework design
- MLRO advisory and skilled-person response