In a recent development, the Financial Conduct Authority (FCA), which serves as the financial markets regulator in the United Kingdom, has taken a noteworthy step to expand its warning list. This list now includes major cryptocurrency exchanges, categorizing them as “non-authorized firms” that citizens “should avoid.” The FCA’s decision to add these exchanges to the warning list is driven by concerns regarding their lack of necessary licensing and compliance with UK regulations, which could potentially expose customers to risks.
Expanded Warning List
The FCA’s expanded warning list encompasses a total of 143 entities, including well-known crypto exchanges such as Huobi-owned HTX and KuCoin. The statement accompanying the warning list advises individuals to refrain from engaging with these firms, as doing so may put them at risk of fraud or financial losses. These exchanges listed on the warning are also prohibited from operating within the UK.
To be removed from the warning list, an exchange must either register with the FCA or obtain a temporary status permit, which allows them to legally operate in the country. Failure to comply with these regulations may result in criminal charges, as highlighted by Jayson Probin, the crypto financial promotions lead at the FCA.
“Anyone who does not comply with the rules would be charged as a criminal.”
The inclusion of major players like Huobi-owned HTX and KuCoin on the warning list has undoubtedly raised concerns among UK crypto investors. These individuals may now feel hesitant to use these exchanges due to the associated risks.
Financial Promotions (FinProm) Regime
Alongside the expanded warning list, the FCA has also extended its rules on financial promotions to cover crypto asset service providers (CASPs). These regulations apply to all crypto firms, regardless of their location, if they promote their services to UK consumers. Under the new rules, crypto firms must provide clear risk warnings to UK-based consumers and meet elevated technical standards. One of these standards includes implementing a 24-hour cooling-off period for new customers.
This Financial Promotions (FinProm) Regime aims to ensure that crypto promotions in the UK are conducted in a fair, transparent, and trustworthy manner. Crypto exchanges like Binance, OKX, and MoonPay have already announced their collaboration with the FCA to adhere to these new promotion rules.
However, some crypto exchanges in the UK are reportedly struggling to comply with the new promotion rules. The FCA identified major crypto exchanges KuCoin and HTX as potential violators for promoting their services in the UK without permission. Consequently, adding these exchanges to the warning list serves as a clear message that such actions are prohibited within the United Kingdom.
As of October 9, 2023, the FCA’s list of registered crypto asset providers includes 42 entities that have successfully met the regulatory requirements. Notable names on this list comprise Bitstamp, Revolut, and Gemini. Additionally, PayPal temporarily suspended crypto transactions for its UK customers to align with the FCA’s requirements, while the Dubai-based cryptocurrency exchange Bybit temporarily halted its services in the UK due to regulatory changes. These actions underline the FCA’s commitment to establishing uniform regulatory standards for all digital asset transactions in the UK, fostering a reliable and trustworthy environment for crypto interactions.
