tl;dr
The UK's FCA slashed crypto approval times by 69% but faced a 43.5% drop in applications due to regulatory uncertainty, global competition, and firms awaiting new legislation. Despite faster processing, the sector grapples with balancing innovation and compliance.
**UK Crypto Regulator Speeds Up Approval Process, But Applications Drop Amid Uncertainty**
The UK’s Financial Conduct Authority (FCA) has made headlines for slashing the time it takes to approve cryptocurrency registration applications by 69% since 2023. Yet, this progress is overshadowed by a stark decline: a 43.5% drop in applications over the past two years. The data, revealed following a freedom of information request by London-based law firm Reed Smith, paints a complex picture of a sector navigating regulatory shifts, evolving expectations, and global competition.
### **Faster Approvals, Fewer Applicants**
The FCA’s crackdown on cryptoasset service providers (CSPs) has seen a dramatic reduction in processing times. In the 2022/23 financial year, the average approval timeline stretched to 511 days—a period often described as “paralyzing” by industry insiders. By 2024/25, that figure plummeted to 158 days, a 69% improvement. This提速 has been welcomed by crypto advocates, with CryptoUK, a trade body representing 200 members, calling it a “boost to confidence.”
However, the number of applications has dwindled. From 46 in 2022/23, the total dropped to 28 in 2023/24 and 26 in 2024/25. Successful approvals followed a similar trajectory, falling from eight to six to three over the same period. The FCA’s approval rate—measuring the percentage of applications granted—plummeted from 17.4% in 2022/23 to 11.5% in 2024/25.
### **Why Are Firms Pulling Back?**
The decline in applications isn’t just about delays. Industry leaders point to lingering perceptions of a cumbersome process and regulatory uncertainty. Simon Jennings, Executive Director of the UK Cryptoasset Business Council, notes that while the FCA has “built up knowledge and resources,” many smaller firms still view the system as “clogged.”
A key factor, according to Reed Smith partner Brett Hillis, could be the UK government’s impending “robust” crypto legislation. Some firms may be pausing their applications to avoid a potential two-step process: first securing registration, then seeking full FCA authorization once new rules take effect. “Firms might be waiting to avoid duplicating efforts,” Hillis explains.
### **A Competitive Landscape**
The FCA’s push for faster approvals comes as global regulators like Singapore’s Monetary Authority (MAS) and the UAE’s Virtual Assets Regulatory Authority (VARA) actively court crypto firms with streamlined processes and incentives. Jennings warns that the UK risks falling behind: “If we don’t stay agile, we’ll lose out to jurisdictions that are more welcoming.”
The FCA’s recent consultation on minimum standards for crypto firms aims to “develop a sustainable and competitive sector,” but industry leaders urge more transparency and resources. “Firms need to feel guided, not just regulated,” Jennings says.
### **The Road Ahead**
Despite the challenges, there are signs of progress. The number of firms withdrawing applications has fallen sharply, from 70 in 2022/23 to 15 in 2024/25. CryptoUK’s spokesperson emphasizes the sector’s commitment to collaboration, stating that “a full legal framework is crucial.”
For now, the UK’s crypto landscape remains a tightrope walk between regulatory rigor and innovation. As the FCA balances scrutiny with speed, the question lingers: Can the UK retain its foothold in a world where regulators are racing to attract the next wave of digital assets?
One thing is clear: The path to a thriving crypto sector isn’t just about approvals—it’s about trust, clarity, and staying ahead of the curve.