Crypto exchanges adapt to new UK regulations
Several cryptocurrency exchanges are making necessary adjustments to comply with new UK government regulations. They are required to advertise their services responsibly and to inform their users about the risks of trading digital assets.
The regulations are part of the UK’s Financial Services and Markets Act. The Act recently expanded the scope to cover cryptocurrency and stablecoin businesses, as well as subject them to the same rules as traditional financial services.
According to the report by CNBC, starting today, users of these exchanges must fill out a declaration entailing their investor profile and respond to a questionnaire about financial services and regulations.
Depending on certain criteria, the declaration requires the users to categorize themselves as a specific investor type, which is either high-net-worth people who earn £100,000 ($127,002) or restricted investors who will not invest more than 10 percent of the assets.
The user will be prevented from trading with their cryptocurrency account if the requirements are not completed.
These measures aim to protect the investors while promoting responsible trading. Therefore, to market crypto assets to retail clients, crypto firms must obtain permission or registration from the Financial Conduct Authority (FCA). According to the FCA, cryptocurrency assets remain at high risk, and customers who lose their money are unlikely to receive government compensation.
Measures by crypto firms
Cryptocurrency trading platform Coinbase has taken several measures to adapt to the UK’s changing regulations. The company has set compliance guidelines for its UK users to ensure that they are aware of the investment risks.
As part of Coinbase’s compliance procedures, users are obligated to classify their investor type and complete a form to declare their awareness of the high risk involved in cryptocurrency investments. The company has announced in an email to its UK users that both tasks must be completed to maintain access to their accounts.
@coinbaseuk so you are telling us to complete the UK FCA declarations, Task 1 & 2 but they are no where to be found on the app or logging in on a computer, what a joke! I didn’t have this problem with other exchanges. pic.twitter.com/pwLOem6Yls
— Waiτing to moon (@already_mooned) January 4, 2024
Another crypto exchange, OKX, has also employed a similar approach. On January 2, OKX announced the imposition of new standards in accordance with guidelines established by the UK regulator. Its users are required to fill out two questionnaires starting today.
The first questionnaire will classify users according to their investor profiles and ensure they are well-informed about the risks of investing in cryptocurrencies. The second questionnaire will evaluate users’ understanding and experience in cryptocurrency investing, including their knowledge of other specific topics and the imposed risks.
Besides the two exchanges, Crypto.com and Gemini have also agreed to comply with UK investor protection standards. They are collaborating with local regulators to provide users with the needed information to make informed investment decisions.
On the other hand, other crypto firms are struggling to adjust to the new regulations, with some halting their operations in the UK. For example, an unregistered cryptocurrency company, ByBit, stopped providing services to its UK customers.
Meanwhile, Luno stopped some of its UK customers from making crypto investments. PayPal has also suspended some cryptocurrency services until its crypto arm complies with the new rules.
In October 2023, Binance attempted a third-party company to obtain marketing authorization in the UK. However, it was blocked by the FCA, claiming at that time that the decision was made to protect consumers.
