Cryptocurrency firm linked to Philip Hammond still lacks UK approval | Philip Hammond
Former Chancellor Philip Hammond could see the value of his stake in cryptocurrency firm Copper plunge after the company suffered a blow to its hopes of obtaining permission to operate in the UK, forcing it to explore a move to Switzerland.
The Guardian understands that Hammond, recruited by Copper Technologies as a ‘lead adviser’ in 2021, owns ‘growth shares’ worth up to 0.5% of the company, implying a notional value of 15 million dollars after its last fundraising valued at 3 billion dollars.
The Tory peer, who served as chancellor between July 2016 and July 2019, has been a strong advocate for the UK’s embrace of digital assets. Earlier this year, he said it was “frankly quite shocking” that Britain was lagging behind other countries in creating a regulatory framework for crypto.
Copper is now struggling to negotiate the worn-out regulatory regime for cryptocurrency that already exists, putting its fundraising plans — and the value of Hammond’s stake — at risk.
The Financial Conduct Authority (FCA), which recently launched a digital asset manager hunt, requires crypto businesses to apply for registration, which means they must prove they have sufficient anti-money laundering controls. silver.
The regulator granted full approval to 34 companies and rejected dozens that could not prove they met sufficient standards, either because they had not been warned against money laundering , or because they “didn’t have the controls in place to raise the red flags in the first place.”
A smaller group of 12, including Copper, were placed on a list of companies with “temporary registration”, meaning they were allowed to trade pending the outcome of their application.
Although the FCA has granted an extension to the application deadline until the end of March, Copper is one of five who remain on the temporary list.
The FCA said companies on this list “may make representations […] or may have special liquidation arrangements” and were “aware of what is required of them to complete their claim”.
Copper, which says $50 billion of “notional” money passes through its “infrastructure” every month, told the Guardian that its discussions with the FCA were ongoing.
However, a well-placed source said Copper had started exploring alternatives, including a move to Switzerland. The move would likely require more than 500 customers, including family offices, merchants and private banks, to open accounts there.
Copper said its international expansion required hubs in different countries. It already has an office in Zug, Switzerland.
Hammond said earlier this year that crypto firms are increasingly considering relocating to countries such as Switzerland, Monaco and Germany due to a poor regulatory framework in the UK.
Any failure of Copper’s UK ambitions could affect its plans to raise $500 million from venture capitalists via a fundraising effort targeting a $3 billion valuation.
Would-be investors Accel and Tiger Global considered pulling out of the funding process due to difficulty securing FCA blessing, crypto website CoinDesk reported earlier this month.
Any disruption could affect the value of Hammond’s stake, understood to be in growth stocks. Generally, holders of growth stocks can cash out if the company is sold, reaches a certain valuation, or goes public, but cannot receive dividends or vote on corporate resolutions. business.
While obtaining FCA approval has proven difficult for some crypto firms, the government has taken steps to create a welcoming environment for digital assets.
Earlier this month, Rishi Sunak – so far one of two successors to Hammond as chancellor – declared his wish to turn the UK into a “global hub” for crypto.
An FCA spokesperson said it was trying to ensure companies “meet the minimum standards we expect – that those running these companies are fit and proper and have adequate systems in place to identify and prevent the flow of money from crime”.
They said: ‘These are in place so that our financial system is not open to abuse by those who want to move around and hide money made from violence, drugs, corruption or exploitation of others.
“When we decide that a company is not meeting the listing standard, we are clear with them where they are wrong. Money laundering regulations do not include a provision for companies to withdraw their claims. However, in some cases, we may allow a business to opt out, cease operations, make necessary changes based on our feedback, and reapply.
“Companies that don’t opt out receive a formal decision that they can appeal, including in court.”
Hammond was approached for comment.