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Much is made of PayPal receiving a crypto licence from UK watchdog FCA. However, heavy restrictions apply.
For even such an illustrious company as PayPal to obtain a crypto licence in the UK is perhaps cause for celebration for the payments giant. However, in spite of wishing to encourage crypto companies to the UK, the Financial Conduct Authority (FCA) has seen fit to make the regulatory landscape in the UK somewhat bleak and uninviting.
According to information on the FCA website, PayPal is among the companies registered to carry out “specific crypto activities” in the UK. A list of all these companies is more than 40 strong, and clicking on any of them reveals the restrictions that apply to each one.
On clicking through to the restrictions that apply to PayPal, it can be read that the company is “registered for certain cryptoasset activities”. Delving further and clicking on “See the requirements applying to this firm”, it can be seen that “certain services to new and existing customers will be prohibited”.
The FCA’s definition of the prohibited services is set out here:
“This includes, but is not limited to, ceasing on-boarding new customers and restricting existing customers to hold and sell functionality; and The Firm cannot expand its current offering in Cryptoassets. Including, but not limited to:
Operating a machine which utilised the automated process to exchange cryptoassets for money or money for cryptoassets.”
It’s probable that PayPal would not be thinking of introducing any machines for vending crypto in the UK, but obliging PayPal to only allow customers to “hold and sell” does not leave PayPal any room for manoeuvre at all and appears to exclude both PayPal and its customers from buying any crypto.
Much has been trumpeted about the UK seeking to be a hub for the cryptocurrency sector. However, regulations that are so stringent as to put off many crypto companies from even engaging with the process and also hobbling those that do with heavy restrictions, is likely to put the dampers on the UK’s crypto ambitions.
Crypto was invented to be used for fast, cheap, and secure transactions from peep-to-peer, not to be bogged down with all the onerous regulations and middlemen of the traditional financial system. It is to be hoped that common sense will prevail.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.