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Crypto regulation may be coming in the U.S., but if it looks anything like what’s transpiring in Europe, the process will be messy.

In the U.K., a looming deadline for registering digital-asset businesses has prompted some companies to say they plan to leave the country, while others face uncertainty over whether they’ll be allowed to continue operating.

The U.K.’s Financial Conduct Authority (FCA) plans to suspend temporary registrations for crypto companies on April 1, seeking to bring companies into full compliance with regulations that cover anti-money-laundering, counter-terrorism-financing, and other rules.

Of the more than 100 firms that joined the temporary regime, 33 have been registered. A dozen companies remain on the published list of crypto asset businesses with temporary registrations. The operations of these 12 companies are in jeopardy: The FCA has said they can continue operating until April 1 while their applications are pending.

The FCA on Wednesday extended the deadline for a small number firms, including those that are appealing the regulatory agency’s decisions.

Some big European crypto companies are now in limbo, including Revolut, a digital bank and one of the most prominent European fintechs. Another is Copper, a custodian and institutional trading firm whose partners include

State Street

(ticker: STT).

Sources familiar with the matter told Barron’s that Revolut and Copper are among the firms that will be allowed to continue operating after the April 1 deadline. Uncertainty remains for others.

“There is a complete lack of clarity of what happens to the customers of businesses not on the FCA register at the cutoff date,” said Nick Jones, the CEO of crypto wallet Zumo, which was granted FCA registration last December.

U.K. regulators and lawmakers are taking a multipronged approach to regulating the industry. The Bank of England recently called for “enhanced regulatory and law enforcement frameworks” for crypto markets and assets. The government launched a task force to investigate the space in early 2018.

Since early 2020, the FCA has made it mandatory for crypto firms to be registered, yet it’s been a slow process. Rather than try to comply, some crypto companies have opted to leave the country.

Among those are Wirex, a digital payments platform, which told Barron’s in a statement that it had agreed with the FCA to withdraw its application for registration, but would continue to service U.K. customers through a Croatia-regulated subsidiary.

Similarly, B2BC, a liquidity provider, told Barron’s in a statement that it had withdrawn from temporary registration and is transferring its trading operations to a U.S.-based division. Its FCA-authorized derivatives business is unaffected.

GlobalBlock Digital Asset Trading

(BLOK.TSX), a Canadian-listed digital asset broker, plans to incorporate in Lithuania and reapply with the FCA in the future.

Critics of the FCA say it’s imposing tougher rules on crypto companies than it has on firms involved in traditional financial services.

“The recent activity from the FCA reflect the disinclination toward crypto at an institutional level. They haven’t approached this like a normal [anti-money-laundering] certification,” said James Kaufmann, a partner at London law firm Howard Kennedy, whose practice focuses on digital assets.

The FCA says it’s just trying to protect consumers and maintain financial stability. “We have seen too many financial crime red flags missed by the crypto asset businesses seeking registration,” a spokesperson from the regulator told Barron’s in a statement. “Worse, we have seen examples where firms do not have the controls necessary to raise red flags in the first place.” 

The experience in the U.K. could be a harbinger of what’s to come in the U.S., where momentum is building for more crypto regulation. President Joe Biden recently signed an executive order tasking federal agencies with proposals for comprehensive rules. In Congress, Sens. Cynthia Lummis (R., Wyo.) and Kirsten Gillibrand (D., N.Y.) are working on bipartisan legislation to regulate crypto companies and digital assets.

Write to Jack Denton at jack.denton@dowjones.com