On the heels of the U.K.’s exit from the European Union (EU), it’s only logical that the country will be looking to boost domestic revenue everywhere it can. The country’s Financial Conduct Authority (FCA) has decided to target the cryptocurrency industry early, and has published (in pdf) an updated fee schedule for businesses operating in the ecosystem. Some companies are certainly not going to be happy with the amount of money they’re going to have to pay.
According to the new fee schedule, the expected flat fee of £5,000 (about $6,500) to be paid by all entities in the space has been thrown out the window. In its place, businesses that generate income of up to £250,000 (just under $327,000) from domestic crypto-asset activity will pay around £2,000 (about $2,600). However, those who earn over that amount will be stuck with a fee of £10,000 ($13,000).
Digital assets are now more closely controlled by the FCA than before, which the regulatory body uses as justification for the fee rates. It is supervising the ecosystem and providing guidance for anti-money laundering and counter-terrorism efforts within the industry, and asserts that these operations require more financial support to be properly maintained. The FCA explains, “We are funded entirely by fees and levies from the businesses we regulate. We proposed a flat-rate application charge for registration of £5,000 to recover estimated gateway costs of £400,000 from approximately 80 potential applicants known to us.”
When the initial £5,000 fee was put forth, a lot of smaller businesses spoke out against the measure, arguing that the fee was too high and that it would hurt their operations. The FCA took this into consideration when finalizing its fee schedule, and explains, “There are costs to undertaking any business and it is not unusual for companies to budget for a loss in the early years. One submitted evidence that direct regulatory fees and levies typically represented 3%–4% of firms’ revenue, whereas the indirect costs of compliance represented 16% of revenue for firms with revenue up to £250,000.”
The FCA admits that the two fee structures are higher than what it charges other financial industries. It asserts that it charges just £1,500 ($1,950) to most applicants under its supervision; however, it further explains that the fees it establishes are based on the “complexity of the business models” of the applicant.
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