The latest FCA figures reveal that just one in seven applications has been accepted so far.

Just 45 out of a total of 320 applications for registrations determined led to a crypto-asset businesses being registered.

A further 18 applications have yet to be determined.

The FCA became the anti-money laundering and counter-terrorist financing supervisor of UK crypto-asset businesses on 10 January 2020.

The regulator said one of the reasons for the low level of business registrations was the poor quality of submissions.

The FCA said it rejected submissions that did not include key components necessary for it to carry out an assessment, or the poor quality of key components meant the submission was invalid.

The majority of applications for registration that were not accepted as registered were withdrawn, with 228 applications (71%) withdrawn since the start of 2020.

This percentage has increased over the past 12 months with 79% (45) of applications determined in the period being withdrawn.

The percentage of applications registered has also dropped in the last 12 months, with just 4 applications (7%) determined between January 2023 and January 2024 leading to a registration.

The data from the regulator covers applications that were determined up to 1 February.

In October the FCA cracked down on crypto-asset product marketing, with the new rules designed to make the marketing of the products “clearer and more accurate.”

The rules banned incentives such as ‘refer a friend’ bonuses and other incentives. 

While the regulator has repeatedly warned investors to treat crypto-assets with great caution it accepts that many will invest in an area regarded by some as the ‘Wild West’ of investment.

The FCA said it continues to remind people that purchasing crypto-assets remains high-risk and that they should be prepared potentially to lose all their money.

Financial Planning Today Analysis: The latest data from the FCA on crypto-asset businesses would seem to imply a lack of experience in working with regulators among the firms that have applied for regulation. What remains to be seen within the data provided is how many of the firms who have withdrawn their applications return with higher quality submissions at a later date. It remains early days but regulation is clearly having a major impact on crypto firms, at least those who choose to be based in the UK or try to engage with UK investors.