The crypto debit card provider and digital money platform, Wirex, has been granted an FCA E-Money license by the UK Financial Conduct Authority. The license makes it clear that Wirex is a safe and trustworthy business on which consumers can rely. Wirex is one of only three crypto businesses to be awarded this license.
What is an FCA E-Money License?
The Financial Conduct Authority is the UK’s financial regulatory body. Its primary purpose is to make sure that financial institutions are fairly representing the money they hold, allowing for honest and reliable statistics. The regulatory authority is designed to keep all financial services in the UK in check, preventing any of them from acting out malicious or unsavory actions. The FCA regulates over 50,000 separates businesses. Its operations tie closely with the Prudential Regulation Authority (PRA), who work with banks and other financial firms. The FCA, and to some extent the PRA, are independent of the UK government, but they are still accountable to the UK Treasury.
To receive the E-Money license, Wirex had to submit numerous documents to the FCA, as well as grant them access to specific information. The FCA needed to know about the structure of Wirex, as well as its business model. One of the most important elements was that Wirex were required to explain to the FCA how they would go about keeping their system fair, and how they would regulate their system for dishonest activity. They needed to prove that their methods were suitable.
Wirex were also required to show the FCA how robust their system was, with the intention of proving that it was built on a sound foundation. Since the 2008 global financial crash, the FCA (among other regulatory bodies) sharpened up its guidelines to make sure that all financial services could sustain themselves. This means that risk management is a huge factor in the assessment of an E-money license.
A critical view of the Wirex team, including its investors and board of directors, was handled too. This was a simple check to make sure that they were trustworthy and qualified people.
The entire evaluation can take up to one year, as the FCA needs to be thorough in their decisions.
Crypto is beginning to get respected
Wirex is only the third crypto-based company to be awarded an E-Money license— the other two are Coinbase and Circle. While this is a significant positive sign for the company, it is worrying that the number of licenses given out is in such low numbers. The problem lies in the fact that regulatory bodies are still skeptical of the cryptocurrency industry. In the eyes of many regulators, cryptocurrency is a term synonymous with scams and the purchasing of illicit goods. Anybody who has engaged in this market knows that the industry is so much more than that. Cryptocurrency is just as trustworthy as any other asset class. There are a considerable number of crypto-based businesses which are legitimate organizations— Wirex is only one of them.
The negative attitude around crypto needs to change. Luckily, the 2017 bull market shone enough light on cryptocurrency for many news organizations to change their view, but this has not been enough to alter regulatory bodies’ views drastically. However, the situation is improving— while it may not seem like much, the US NASAA has been working with crypto enthusiasts to shut down fraudulent companies. The fact that a regulatory body is not merely painting all crypto companies with the same brush means that a respect for the industry is slowly happening.
What happens with Wirex now?
For the most part, Wirex will continue to run in a similar fashion. Most users will not notice much of a difference to the service. However, an E-money license makes it easier to integrate more fiat currencies into the business. In fact, Wirex is already planning to add 25 different currencies to the card. This type of functionality is unparalleled in the crypto debit card industry.
The license also gives Wirex more autonomy, and its customers more freedom. The company can now officially provide electronic money as a payment alternative. Make note that electronic money is not considered the same as a cryptocurrency. Electronic money is essentially fiat cash in digital form, no blockchain or cryptography is needed for this.
The Wirex co-founder, Dmitry Lazarichev, commented on the situation, saying that “…the licence is a testament to the fact that the company is committed to pursuing and achieving the highest levels of diligence and integrity in its business operations. Wirex’s submission to the FCA’s jurisdiction should leave customers in no doubt that Wirex will provide them with a best-in-class platform and accompanying service“.
Kai is a cryptocurrency copywriter and professional trader. He can often be found investigating various cryptocurrencies, whitepapers, and blockchain technologies. Kai has been a professional writer for 5+ years, and has invested in 50+ different coins and tokens. He also currently studies Law and Philosophy at university.