Coinbase, a prominent crypto company, faced a setback when the UK’s Financial Conduct Authority (FCA) imposed a hefty fine of £3.5 million for Anti-Money Laundering breaches. This fine was a result of CB Payments Limited (CBPL), a Coinbase Group subsidiary, repeatedly violating the FCA’s guidelines. Despite an initial fine of £5 million, CBPL managed to secure a 30% settlement discount, reducing the penalty to the final amount. The FCA’s scrutiny revealed that CBPL failed to comply with the regulatory requirements even after agreeing to enhance its financial crime control policies in 2020, following a regulatory visit.
Revolut’s Regulatory Success
On a different note, Revolut had a more positive outcome with the UK’s Prudential Regulation Authority (PRA) granting them a restricted banking license after a lengthy waiting period of over three years. This license signifies a significant milestone for Revolut, positioning the company in the mobilization stage as it embarks on its journey as a bank in the UK. Francesca Carlesi, the UK CEO of Revolut, expressed a sense of responsibility and commitment to enhancing the financial well-being of their customers through innovative products and services. Despite the challenges faced by many in the crypto industry, Revolut has managed to carve out a niche for itself by launching Revolut X, a dedicated crypto exchange aimed at retail customers.
Lessons Learned
The divergent paths taken by Coinbase and Revolut shed light on the importance of regulatory compliance and risk management in the crypto industry. While Coinbase’s missteps resulted in a substantial financial penalty and reputational damage, Revolut’s adherence to regulations secured them a valuable banking license, paving the way for further growth and innovation. Both companies serve as cautionary tales for other players in the crypto space, emphasizing the need for robust compliance mechanisms and a proactive approach to regulatory challenges. As the industry continues to evolve and face increased scrutiny from regulators worldwide, companies must prioritize regulatory compliance to ensure sustainable growth and long-term success.