UK Edition
UK crypto scene set for boost as London firm poised for FCA approval
A UK cryptocurrency firm is expected to receive approval from the Financial Conduct Authority on Monday to become a large-scale asset manager, in a move that could accelerate London’s ambitions to become a global hub for the digital currency scene.
Prime Factor Capital, co-founded in 2017 by Nic Niedermowwe, a cryptography expert, and Michael Wong, an ex-fund manager at BlackRock, is poised to be the first cryptocurrency firm in the UK to receive full-scope authorisation from the financial regulator.
The licence will enable the firm to manage “unlimited amounts of capital”, which is not a possibility for smaller-sized asset managers that are capped at €100m.
It is expected to open the doors for institutional investors who have been sceptical about a market known as the “wild west” for its volatility.
“Full-scope managers are subject to more stringent disclosure and reporting requirements,” says Mr Niedermowwe, chief executive of Prime Factor Capital.
“This is particularly relevant in the cryptocurrency space, where transparency and sound operational procedures are often lacking.”
The authorisation will require the company to appoint a regulated third party that can provide independent oversight on processes such as cash flow monitoring, which Mr Niedermowwe says will provide “additional layers of protection to investors”.
The industry has been notorious for money laundering, with more than $356m worth of digital currencies stolen from exchanges in the first quarter of 2019, according to Cipher Trace, a research firm.
It comes as the cryptocurrency markets have seen a spike of activity in recent weeks upon news that Facebook would be releasing its own digital coin, Libra, next year.
Bitcoin, the world’s most popular cryptocurrency surged in price by more than 40pc last week to $13,000, before seeing all its gains wiped out by Friday.
Mr Niedermowwe doesn’t expect the unpredictable swings in the market to disappear anytime soon, but believes “there are a lot more tools now out there to manage that volatility”.
He adds that Facebook’s plans could help open up cryptocurrency payment services to a global user base, but there are likely to be “huge regulatory hurdles” ahead for the company.