Crypto regulation: showdown between Revolut and the British financial policeman
Two different universes? The neobank Revolut must redouble its efforts to comply with the legislative and regulatory requirements British.
A more rigorous back office and controls for a neobank
The report of Financial Reporting Council published last July did not reveal the name of the company which is under fire from criticism from British financial regulators. He questioned the audit inadequate ” that the accounting firm BDO had carried out with a ” financial service provider “. The report then referred to a ” risk of undetected material misstatement “.
However, a recent article by FinancialTimes cites Revolut, as the principal concerned in this case. The neobank is currently under pressure from regulators, as to improvement of its internal control procedures, which play a major role in the production of reliable financial reports, and on the question of its compliance with legal and regulatory requirements.
The Financial Times also quotes a source familiar with the matter, who points out that Revolut needs to improve ” uninviting things like its back office and controls “, because the neobank must have a ” back office like a bank “, while having ” the culture of a tech company “.
Thus, Revolut faces significant regulatory challenges, as the company has faced resignations within its risk and compliance departments. The neobank attended, in particular, the departure of its British risk managerscompliance and money laundering.
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Revolut or fintech and cryptocurrencies at the pace of traditional finance
These tensions between regulators accustomed to much more traditional finance, and more modern players who use digital technology to bring their touch of innovation to the sector, testify to a mutual misunderstanding and different logics used by each party, particularly at the temporal level, in the way each manages its activities .
The CEO of Revolut, Nikolay Storonsky, had also complained about the time regulators were taking to review his application for a banking license. For a neobank, some regulator requirements may resemble mechanisms sometimes useless in their business model, which also provide rigidity, to the detriment of the flexibility sought in operational processes.
In addition to this banking license, Revolut must also obtain a permanent license, which will allow it to offer its crypto services in the United Kingdomwhile the neobank has just won in this field, a major regulatory win with Cypriot authorities.
The neobanks appeal to a growing number of consumers, and could play a major role in the adoption of cryptocurrencies. Nevertheless, their sustainability poses questions, in view of the regulations in force and their financial performance. Revolut still needs to make additional efforts to adapt to the legislative and regulatory environment. Its competitor Starlingwho is the first neobank in history to be profitabledoes it do better in this area?
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