As of September 2025, the UK’s Financial Conduct Authority (FCA) has noticeably stepped up its pace in processing registration applications from cryptocurrency service providers. However, the response from the industry has been somewhat lukewarm. Despite the regulator’s efforts to streamline the approval timeline, a surprising trend has emerged—there’s a drop in the number of applications being submitted. This shift raises questions about the current state of the crypto market and what might be deterring firms from jumping on the registration bandwagon.
Accelerated Approvals: A New Era
In recent months, the FCA has made significant strides in addressing one of the crypto industry’s longstanding complaints: the sluggishness of regulatory approvals. Historically, companies seeking to operate legally within the UK have faced long waiting periods, often stretching into months, to gain the necessary licenses. This bottleneck has been a source of frustration, stifling innovation and expansion in one of the most dynamic sectors of the financial world.
But now, things are changing. The FCA has implemented a range of measures to expedite the approval process. These include increasing staffing levels in relevant departments, deploying advanced digital tools to handle applications more efficiently, and adopting a more proactive communication strategy with applicants. As a result, many companies are seeing their applications processed in record time, which should theoretically be a boon for the industry.
The Unexpected Decline in Applications
Despite these improvements, the anticipated surge in applications hasn’t materialized. Instead, there’s been a noticeable drop-off in the number of firms seeking registration. This trend is puzzling, especially given the previous clamor for a faster approval process.
Experts in the field speculate that several factors might be contributing to this decline. For one, the volatile nature of the cryptocurrency market itself, characterized by sudden price swings and regulatory uncertainties, could be causing some firms to adopt a wait-and-see approach. Moreover, the global economic landscape, still recovering from the aftershocks of the pandemic and geopolitical tensions, might be prompting companies to exercise caution before making significant regulatory commitments.
Industry Voices: A Mixed Bag
Opinions within the industry are divided on the implications of the current trend. Some stakeholders view the reduced number of applications as a positive development, arguing that it could lead to a more mature and stable market landscape. They believe that companies that do seek registration are likely committed to long-term compliance and sustainability, which can only benefit the sector’s reputation.
On the flip side, others express concern that the drop in applications might signal a lack of confidence in the market or the regulatory framework. They worry that potential innovators and disruptors might be discouraged from entering the space, ultimately stifling competition and reducing the diversity of services available to consumers.
The FCA’s Perspective
From the FCA’s standpoint, the focus remains on maintaining a robust regulatory environment that balances innovation with consumer protection. A spokesperson for the agency emphasized that while the decrease in applications is noteworthy, it doesn’t necessarily indicate a problem. Instead, it might reflect a more discerning approach from companies, who are taking the time to ensure they can meet the stringent requirements set out by the regulator.
The FCA is also keen on ensuring that its door remains open to dialogue with industry players. By fostering a collaborative atmosphere, the agency hopes to address any lingering concerns that might be contributing to the hesitance observed among crypto firms. The ultimate goal is to create a regulatory framework that is not only efficient but also conducive to growth and innovation.
Looking Ahead: What Can We Expect?
As we move further into 2025, the crypto industry in the UK stands at a crossroads. The FCA’s efforts to streamline the registration process are a step in the right direction, but the decline in applications suggests that there’s more work to be done. It’s crucial for both the regulator and the industry to engage in ongoing dialogue to understand the underlying causes of the current trend and address them effectively.
For now, industry watchers will be keeping a close eye on how the situation evolves. Will the FCA’s continued efforts to simplify the registration process eventually lead to an uptick in applications? Or will firms continue to exercise caution, waiting for clearer signals from the market and regulators alike? Only time will tell, but one thing is certain: the world of cryptocurrency remains as unpredictable and fascinating as ever.
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
