In a recent shift, the UK’s financial markets regulator, the Financial Conduct Authority (FCA), has added a surge of major cryptocurrency exchanges to its warning list, labeling them as “non-authorized firms”. The move serves as a caution for citizens to avoid such platforms. Included amid 143 new entities are heavyweight exchanges like HTX, a subsidiary of Huobi, and KuCoin.
The impetus for the FCA’s decision revolves around concerns involving these exchanges’ operation sans the essential license or adherence to UK regulations, potentially leaving customers vulnerable. The tug of war between regulatory compliance and financial innovation is not new, but this change might fuel it further.
To resume operations within the UK, these exchanges must register with the FCA or secure a temporary status permit. Failure to adhere might result in severe penalties. As stated by Jayson Probin, the crypto financial promotions lead at the FCA, legal action would be taken against violators, which can include website takedowns and enforcement measures.
Considering the significant presence of exchanges, like HTX & KuCoin, the FCA’s move is bound to spark worry among UK crypto investors. However, the FCA hasn’t stopped at the warning list, they have refined their promotion regulations to include crypto asset service providers (CASPs). But does this chokehold on crypto businesses signal a lack of faith in crypto or a growing faith in its potential?
The new set of rules, known as the Financial Promotions (FinProm) Regime, encompass all crypto firms marketing their services to UK consumers. They are now required to present clear risk warnings and stick to elevated technical standards, including a compulsory 24-hour cooling-off period for newcomers.
While some crypto exchanges appear to struggle with these new promotion parameters, others like Binance, OKX, and MoonPay are actively cooperating with the FCA to see through compliance.
Nevertheless, the proactive regulatory approach of the FCA is evident in its record of only approving around 13% of the 291 registration applications received since 2020. With well-known entities like Bitstamp, Revolut, and Gemini making up the 42 registered crypto asset providers as of October 9, 2023, the FCA’s commitment to establishing transparent regulatory standards is undeniable.
Even global digital payment giant PayPal temporarily halted crypto transactions for its UK users to conform to the FCA’s rules. Consequently, Bybit, the Dubai-based cryptocurrency exchange, suspended all its UK services due to “regulatory changes”. This highlights the rigor with which the FCA is striving to construct a reliable, transparent world of digital asset transactions in the UK. Yet, the question remains, is the trade-off between regulatory safety and market growth sustainable in the long run?
Source: Cryptonews
