⚡Ripple obtains FCA license: breaking the ice on UK crypto payment compliance

1. Regulatory Milestones: The Strategic Significance Behind Dual Licensing▸▸

◆1.1 Approval details: EMI license + crypto asset registration

• Scope of authorization: issuing electronic money, processing payments, managing customer funds
• Regulatory Framework: Comply with Electronic Money Regulations 2011
• Compliance requirements: capital adequacy, segregation of client funds, anti-money laundering (AML) and counter-financing of terrorism (CFT) controls

• Registration basis: Money Laundering Regulations 2017
• Core obligations: Customer Due Diligence (CDD), Suspicious Activity Reporting (SAR), Transaction Monitoring
• Supervisory entity: FCA Anti-Money Laundering Supervision Department

◆1.2 Strategic significance: London as a global compliance pivot

• The UK is one of the most stringent financial regulatory jurisdictions in the world, and the FCA license has international credibility.
• Provide a "regulatory passport" effect for Ripple to enter other European markets
• After settling the lawsuit with the US SEC, strengthening the global compliance image

• Target customer groups: British banks, payment institutions, financial technology companies
• Service products: Ripple Payments (cross-border payments), custody services, RLUSD stable currency, Ripple Prime (multi-asset brokerage services)
• Technical advantages: low-cost, high-speed clearing capabilities based on XRP Ledger

• Over £5 million invested in UK universities through Universities Blockchain Research Initiative (UBRI)
• Cultivate compliance talents and promote regulatory technology (RegTech) research and development

2. Strict restrictions: Approval does not equal "full license""▸▸

◆2.1 Operation restricted area: "semi-permission exclusive to the organization""

• No provision or participation in physical withdrawal/deposit facilities
• Avoid direct exposure of retail users to crypto assets

• No payment or crypto services may be provided to individual consumers
• No services may be provided to micro-enterprises or charities
• Explicitly limited to wholesale markets and institutional clients

• Need to declare to FCA and obtain approval on a case-by-case basis
• Strict control over third-party partner networks

• Although it holds an EMI license, the actual issuance function requires further approval.
• Distinguishable from payment service processing permissions

• B2B scenario limited to institutional and wholesale customers

◆2.2 Regulatory logic: gradual "sandbox" approval

• Approval of institutional business first, observing operational compliance and system stability
• Minimize retail risk exposure and protect consumer rights

• As Ripple's compliance record accumulates, it can apply to expand the scope of the license in the future.
• Reserve transition space for the new FSMA crypto regulatory regime in 2027

• Limit agent network expansion and avoid regulatory arbitrage
• Strictly control the flow of funds and ensure that anti-money laundering monitoring covers the entire chain

3. New UK Crypto Regulatory Framework: 2026-2027 Transformation Roadmap▸▸

◆3.1 Key time node: forced transition from MLR to FSMA

• All crypto asset service providers can begin applying for full authorization under the Financial Services and Markets Act 2000 (FSMA)
• Application window period: at least 28 days, and will close at least 28 days before the new system takes effect in October 2027
• The FCA will provide information sessions and pre-application support services

• All crypto asset service providers operating in the UK must hold an FSMA authorization
• Existing Money Laundering Regulations (MLR) registrations or payment services licenses will not automatically convert to FSMA authorizations
• Companies not authorized by FSMA will be banned from operating in the UK

• Companies that already have FSMA authorization need to update their existing license to cover encryption business
• Crypto companies that rely on third-party authorized companies for financial promotion must obtain direct FCA authorization

◆3.2 The deep logic of institutional transformation

• The current MLR system mainly focuses on anti-money laundering and counter-terrorism financing, and does not adequately cover market conduct, consumer protection, and prudential supervision.
• The FSMA framework integrates crypto asset service providers into a complete financial regulatory system, covering:
• Capital Adequacy Requirements (Capital Adequacy)
• Conduct of Business Rules
• Consumer Protection
• Prudential Standards

• Avoid bad money driving out good money caused by "regulatory grandfather clause"
• Raise industry entry barriers and eliminate non-compliant or insufficiently capable operators
• Unify regulatory standards and eliminate loopholes in the existing dual-track system

• Benchmarking with the EU MiCA Regulation (Markets in Crypto-Assets Regulation)
• Laying the institutional foundation for the UK to become a global crypto-finance center

◆3.3 Ripple’s next step: apply again in 2026

• Establish a complete FSMA compliance structure: governance structure, risk management, internal audit, compliance team
• Accumulate operational data: prove system stability, anti-money laundering effectiveness, customer due diligence quality
• Prepare application materials: business plan, financial forecast, risk assessment, compliance manual

• Goals: Lift retail restrictions, allow the issuance of electronic money, expand agent network
• Competitive pressure: Competing with global exchanges such as Coinbase, Kraken, and Binance
• Differentiated advantages: B2B payment genes, institutional service experience, XRP Ledger technology underlying

• It is expected that there will be a large-scale reshuffle in the UK encryption market, with small and medium-sized operators exiting or being acquired
• Leading platforms (such as Ripple) are expected to gain market share through compliance advantages

4. Compliance Structure Analysis: How Ripple Meets FCA Requirements▸▸

◆4.1 Anti-money laundering (AML) and counter-financing of terrorism (CFT) systems

• Institutional client identity verification: company registration documents, beneficial owner (UBO) disclosure, director background check
• Enhanced Due Diligence (EDD): for customers in high-risk jurisdictions or politically exposed persons (PEP)
• Ongoing Monitoring: Regularly updating customer information and analyzing transaction behavior portraits

• Real-time transaction monitoring system: identify abnormal transaction patterns (such as rapid entry and exit, large splits)
• Sanctions list screening: real-time checks against OFAC, UN, EU, and UK sanctions lists
• Suspicious Activity Report (SAR): promptly report suspicious transactions to the UK National Crime Agency (NCA)

• Keep transaction records for at least 5 years (in compliance with MLR requirements)
• Receive regular FCA on-site inspections and data audits
• Establish an independent compliance audit department

◆4.2 Capital isolation and prudential supervision

• EMI license requirements: Customer funds must be separated from the company's own funds and stored in separate accounts
• Investment restrictions: Client funds can only be invested in low-risk, high-liquid assets (such as government bonds, bank deposits)
• Bankruptcy protection: Even if Ripple goes bankrupt, customer funds are protected by law and will be returned first

• Minimum capital: EMI institutions need to hold a certain proportion of their own capital (depending on the scale of the business)
• Dynamic adjustment: As transaction volume grows, the FCA may increase capital requirements

• IT system redundancy backup, network security protection
• Business Continuity Plan (BCP), Disaster Recovery Drills
• Third Party Supplier Risk Management

◆4.3 Market conduct and consumer protection

• Transparent fee structure, no hidden charges
• Clear terms of service and risk disclosure
• Efficient complaint handling mechanism

• No misleading promotion of crypto assets to the public
• Strictly comply with FCA’s Financial Promotion Rules

• Compliant with UK GDPR and Data Protection Act 2018
• Encrypted storage and transmission of customer privacy information

5. Market reaction: XRP price and industry impact▸▸

◆5.1 XRP Price Mild Reaction

• After the news was announced: XRP rose about 0.7%-1% to a range of $2.09-2.11
• 24-hour trading volume: no significant increase in volume
• Correlation with Bitcoin: maintained around 0.75, not independently strengthening

• Expected news: There are rumors in the market that Ripple will be approved by the UK as early as the end of 2025, and the news is priced in advance
• Restrictive Approvals: Investors note "institution-only" operating restrictions and see limited short-term business impact
• Macro suppression: The overall crypto market is under pressure in early 2026, and the uncertainty of the Federal Reserve policy suppresses risky assets.

• XRP fluctuates between $2.00 and $2.20, FCA news fails to break key resistance level
• An upward trend needs to be formed with catalysts such as the progress of the US Ripple-SEC settlement and ETF applications.

◆5.2 Industry Demonstration Effect

• Proof that large crypto companies can pass stringent FCA scrutiny
• Provide application experience reference for other exchanges (Coinbase, Kraken)

• FCA’s restrictive approval model may become a model for global regulators to follow
• Promote the industry's transformation from "technological innovation" to "compliance innovation"

• Ripple’s institutional exclusive positioning is in line with the general trend of institutionalization in the crypto market
• The lines between traditional financial institutions and crypto companies are increasingly blurring

• After FSMA becomes mandatory in 2027, the UK crypto market will form a "licensed oligopoly" pattern
• Small and medium-sized players face pressure to exit or be acquired

6. Global Compliance Landscape: International Coordinates of British FCA▸▸

◆6.1 Comparison with major jurisdictions

• SEC maintains that most crypto assets are securities and promotes supervision through enforcement actions
• CFTC defines Bitcoin, etc. as commodities and governs the derivatives market
• Ripple partially wins SEC lawsuit in 2023 and reaches settlement in 2025
• Features: Overlapping powers of regulatory agencies and high policy uncertainty

• MiCA regulations will take full effect in 2024, establishing a unified EU encryption regulatory standard
• Covers crypto asset issuance, service providers, stablecoins, and market abuse
• Features: Legislation first, establishing comprehensive rules at one time

• Incorporate crypto-assets through amendments to the existing FSMA Act rather than separate legislation
• Maintain regulatory flexibility and can dynamically adjust according to market developments
• Features: Gradual transition, phased implementation

• Digital Payment Token (DPT) services require MAS license
• Strict capital, technology and AML requirements
• Characteristics: High threshold, cautious

• Security tokens are regulated by the SFC and trading requires a license.
• Retail investors will be allowed to trade approved tokens from 2024
• Features: Integration with traditional financial supervision

◆6.2 Britain’s competitive advantages and challenges

• Legal stability: common law tradition, independent judiciary, property rights protection
• Financial infrastructure: London’s position as a global financial center
• Regulatory reputation: FCA’s credibility in international financial supervision
• Talent and innovation: Blockchain research at top universities such as Cambridge and Oxford

• Post-Brexit coordination: Losing the EU "passport" system and requiring separate coordination with the EU
• Market size: The UK domestic market is smaller than the United States or the European Union, and has limited appeal to global encryption companies
• Regulatory costs: Strict FSMA requirements may lead to excessive compliance costs, which are unbearable for small and medium-sized innovative enterprises.

◆6.3 Ripple’s Global Compliance Network

• United States: SEC settlement reached at the federal level, multiple states hold money service licenses (MSB)
• Singapore: MAS In-Principle Approval
• Japan: Virtual currency exchange license (acquired by Coincheck)
• Switzerland: Operating under the FINMA compliance framework
• UAE: Dubai VARA (Virtual Asset Regulatory Authority) registration

• Minimize regulatory arbitrage: hold licenses in major markets to avoid compliance risk spillovers
• Institutional Trust Building: Demonstrate global compliance capabilities to banking and financial institution clients
• Business flexibility: Customize products based on license scope in different jurisdictions

• License applications in emerging markets such as Brazil, India, and South Korea
• Cooperate with central bank digital currency (CBDC) projects in various countries

7. Future Outlook: Key Variables in Ripple’s UK Strategy▸▸

◆7.1 Success or failure factors of FSMA authorization application

• Quality of operational data accumulated before September 2026
• False Alarm Rate and SAR Effectiveness of Transaction Monitoring Systems
• IT system stability and cybersecurity record

• Actual adoption rate among UK institutional clients (banks, payments companies, fintechs)
• Market acceptance of RLUSD stablecoin in the UK
• Competitiveness with traditional payment networks (SWIFT, CHAPS)

• FSMA application progress of Coinbase, Kraken and other exchanges
• Digital asset business layout of traditional financial institutions (such as HSBC and Barclays)
• Compliant payment solutions for other public chains (Stellar, Algorand)

• The British government’s overall attitude towards the encryption industry (whether there is an incentive policy)
• FCA’s approval speed and standards in 2026-2027
• International regulatory harmonization (such as mutual recognition with EU MiCA)

◆7.2 Potential risks and countermeasures

• Risk: FCA raises the approval threshold during the FSMA transition period and rejects applications for retail business expansion
• Response: Focus on institutional business and indirectly serve retail through the B2B2C model (cooperating banks serve as the front end)

• Risk: XRP price fluctuates significantly, affecting customer confidence, and cross-border payment demand is lower than expected
• Response: Promote RLUSD stable currency, reduce dependence on XRP price; expand non-encrypted payment channels

• Risk: Major security vulnerability or network outage in XRP Ledger
• Response: Multi-chain strategy, supporting cross-border payments on other blockchains (such as Ethereum, Solana)

• Risk: Traditional banks seize the low-cost cross-border payment market through SWIFT upgrades (such as SWIFT Go)
• Response: Emphasize the advantages of instant settlement of blockchain and complement SWIFT rather than replace it.

◆7.3 The key time window of 2026-2027

• Test the market feedback of Ripple Payments, RLUSD, and Ripple Prime under institutional exclusive restrictions
• Establish benchmark customer cases (such as working with British payment companies or emerging banks)
• Optimize compliance processes and prepare for FSMA review

• Submit materials as soon as possible after FCA opens the application window in September
• Strive to become the first encryption company authorized by FSMA and set an industry benchmark

• Cooperate with FCA review, provide supplementary materials and on-site inspection
• Adjust business model and risk control based on FCA feedback

• On October 25, the FSMA encryption system came into effect, and Ripple officially operated under full authorization.
• Launch of retail business, agent network, electronic currency issuance (if approved)

8. Inspiration for the encryption industry▸▸

◆8.1 Compliance becomes core competitiveness

• Early years (2010-2017): Technological innovation (Bitcoin, Ethereum) attracts users and investment
• Mid-term (2018-2023): Application scenarios (DeFi, NFT) drive market prosperity
• Maturity period (2024-): Regulatory compliance determines market access and institutional adoption

• Legal team: Understand the regulatory requirements of various countries and design compliance structures
• Technical Capabilities: Transaction Monitoring, Sanctions Screening, Data Security
• Financial strength: meet capital requirements and bear compliance costs
• Government Relations: Communicate with regulatory agencies and participate in rule formulation

• Compliance costs (legal, technical, capital) have become a high threshold
• Forced choice: move to unregulated jurisdictions (regulatory arbitrage) or be acquired by a large company

◆8.2 Institutionalization and differentiation of retail market

• Participants: banks, asset management companies, hedge funds, corporate finance departments
• Products: Stablecoin payment, custody services, compliance transactions, derivatives
• Regulation: strict licensing, prudential supervision, consumer protection

• Participants: individual investors, native crypto users
• Products: DeFi, NFT, Meme coins, high-risk transactions
• Regulation: Relatively loose (but gradually tightened)

• The institutional market has grown steadily within the compliance framework and has become the "mainstream" of the crypto industry"
• The retail market remains innovative but faces stricter investor protection requirements
• The two are connected through "compliance channels" (such as licensed exchanges), but the boundaries are increasingly clear

◆8.3 Competition in the cross-border payment industry is intensifying

• SWIFT: Launch of SWIFT Go (low-amount high-speed payment) and SWIFT gpi (real-time tracking)
• Bank alliance: JPM Coin by JPMorgan Chase, Citi Token Services by Citigroup

• Ripple(XRP/RLUSD)、Stellar(XLM)、Circle(USDC)
• Stable currency payment (Tether USDT, USDC)

• Emerging payment companies such as Wise and Revolut
• Wholesale/Retail Applications of Central Bank Digital Currency (CBDC)

• Technical advantages: XRP Ledger’s 3-5 second settlement speed and low cost (<0.01 USD per transaction)
• Compliance Network: Global multi-jurisdictional license coverage
• Institutional relations: experience in cooperation with 300+ financial institutions

• SWIFT’s network effects and bank inertia
• Market penetration rate of stablecoins (USDC/USDT)
• CBDC squeeze on private cross-border payment solutions

Conclusion: Breaking the ice on compliance, the journey is long▸▸

1. Compliance becomes the threshold for survival: No matter how advanced the technology, companies that do not meet regulatory requirements will be excluded from the mainstream market
2. Institutional and retail market differentiation: Compliant institutional markets and flexible retail markets will follow different rules
3. Global regulatory coordination is accelerating: UK FSMA, EU MiCA, US legislative attempts, major jurisdictions are converging regulatory standards

• Coindesk: Ripple Wins UK Regulatory Approval From Financial Conduct Authority^[1]
• Ripple Official: Ripple Receives FCA Permissions to Scale Ripple Payments in the UK^[2]
• Finance Magnates: Ripple Gets FCA Green Light for UK Payments via Local Unit but with Tight Limits^[3]
• UK FCA Sets 2026 Window for Crypto License Applications^[4]
• Ripple Gets Electronic Money Institutions (EMI) License in the UK^[5]
• The Market Periodical: UK Regulator Sets September 2026 Launch for Crypto Licensing Regime^[6]

◆Reference link