FCA Friction Said to Spook Investors Over Copper’s Reported $500M Raise

London-based Copper Technologies has been unable to close its widely reported $500 million funding round, according to three people familiar with the situation.

The fact that Copper, a crypto custody firm, is one of the U.K. crypto businesses stuck in the Financial Conduct Authority’s temporary registration process has been a problem for prospective investors Accel Partners and Tiger Global, the people said.

“Tiger, and presumably some of the other investors, had wanted to make the closing process tied to the FCA approval,” one of the people said. “So some combination of downsizings or pulling out of the round happened with the investor consortium.”

A second person said Accel had “walked away from the deal,” and that Tiger has cut its intended investment in the round to about a quarter of what was initially a nine-figure commitment.

Accel Partners did not respond to requests for comment. Tiger Global declined to comment. A Copper spokesperson said the firm could not comment since the round is ongoing.

Read more: Crypto Custodian Copper Eyes $2.5B Valuation in $500M Funding Round Talks: Report

Copper, which raised $75 million of Series B funding in the middle of last year, shares a place with 11 other firms on the FCA’s temporary registration regime, which was extended last week. Other firms that have been waiting in line for FCA approval include the likes of fintech major Revolut and crypto platform Blockchain.com, which recently announced a $14 billion valuation.

The funding difficulties could be the last straw for U.K.-headquartered Copper, which is already looking towards Switzerland; last month the firm incorporated Copper Technologies (Switzerland) AG in the canton of Zug.

“It’s not showing the FCA in a very good light,” said a London-based crypto source. “This registration process has frankly been a disaster, and as a result, some very large and successful crypto businesses are leaving the U.K. and won’t come back. So that’s a lot of tax revenue and something of a blow to London as a fintech hub.”

The FCA did not respond to requests for comment.