Revolut receives green light to run UK cryptocurrency business

Financial app Revolut has received permanent approval from the Financial Conduct Authority to run its cryptocurrency business in the UK, after months in limbo on the watchdog’s temporary register.

The news comes as the $33bn fintech awaits a decision on its UK banking licence, and faces questions around its auditing and a cyber attack that affected about 50,000 customers.

The FCA became the anti-money laundering supervisor for UK crypto groups in early 2020, and has clashed with the industry over the speed at which it has processed applications.

Revolut was among a small number of groups granted an extension to the FCA’s temporary cryptocurrency licensing programme in March. It was the last company on this list as other applicants withdrew their requests, were refused registration or had their licenses granted before the end of June. According to the FCA, Revolut received its registration on Monday.

The registration with the FCA will allow Revolut to continue operating a UK-based digital assets business — including trading and offering custody of crypto assets — which became a requirement in April. The FCA’s assessment focuses on controls against money laundering and terrorist financing.

“Revolut has agreed to a number of directions designed to ensure it has the systems and controls to meet the requirements of the money laundering regulations,” said the FCA.

Revolut said it was “delighted to have received full registration as a crypto asset firm”. The firm registered as a crypto asset provider in Cyprus in August.

In 2018, Revolut discovered a spate of suspected money laundering issues, which it reported to law enforcement authorities and the FCA. The following year, it faced questions after it emerged that it had “erroneously” switched off an automated system for flagging potential money laundering for several months in 2018.

Revolut has offered cryptocurrency trading since 2017, ahead of most of its competitors. Last year, chief executive Nik Storonsky said the company would continue to invest in services around the volatile asset class.

The fintech was valued at $33bn in an $800mn funding round in July 2021, led by SoftBank’s Vision Fund 2 and Tiger Global Management, but has faced challenges in recent months, including an exodus of senior staff such as its UK money laundering reporting officer, UK chief risk officer, UK data protection officer and both UK and global heads of regulatory compliance.

Earlier this month, it was hit by a cyber attack that affected more than 50,000 of its 20mn customers, according to a notice posted by the Lithuanian state data protection inspectorate, which has opened an investigation into the data breach.

The fintech is also under pressure from auditors to improve internal controls, after UK regulators highlighted significant flaws in the auditing of its accounts, including an “unacceptably high” risk of “material misstatement”.

Revolut Group Holdings Ltd, the group’s parent company, must file 2021 accounts by Friday. Accounts have been overdue since June 10 for Revolut Newco UK, the entity intended to house the UK banking licence applied for by Revolut in January 2021.

Earlier this month, the Financial Times reported that Revolut was in the middle of a major business review codenamed “Project Prism” which it began in May. It has also revoked job offers to a handful of graduates with just days of warning.