The United Kingdom is launching new rules on financial and cryptocurrency promotion.
Two crypto industry giants, Binance and Coinbase, have recently adjusted to align with UK crypto regulations to continue operations in the country. These changes are pivotal in the crypto industry’s journey as countries struggle to integrate digital assets into their financial systems around the world.
The FCA’s Position on Cryptocurrencies
The Financial Conduct Authority (FCA), the UK’s financial regulator, has been outspoken about its concerns regarding cryptocurrency investments. The authority classifies these investments as high risk, taking into account their potential for significant financial losses.
CryptoBusy, a prominent Bitcoin analyst, recently shared these sentiments on X (formerly known as Twitter). The publication underlined the FCA’s warnings about the inherent complexities of digital asset investments, highlighting potential obstacles such as the absence of regulatory protections and difficulties in liquidating investments when desired.
Additionally, the FCA suggests that investors act carefully and diversify their portfolios rather than putting all their financial eggs in one basket. “”Due to the potential for losses, the Financial Conduct Authority (FCA) considers Crypto investment to be high risk,” quotes CryptoBusy.
How Binance and Coinbase Are Responding
Given these guidelines, Binance and Coinbase have quickly adjusted their offerings for the UK market. In its recent announcement, the former clearly stated that cryptocurrency investments would not benefit from the protection of the Financial Ombudsman Service or the Financial Services Compensation Scheme.
Binance has taken additional steps to ensure regulatory compliance by limiting certain services to UK Professional Clients. Among these restricted services are spot trading of over 350 cryptocurrencies and the ability to transact non-fungible tokens (NFTs).
Coinbase, on the other hand, echoed similar sentiments by urging UK-based investors to proceed with caution. They advised potential investors not to venture into the crypto space unless they are fully prepared to endure potential losses, emphasizing the high-risk nature of digital asset investments.
In a recent statement on its blog, Binance reported the launch of a new exclusive domain for British users in an attempt to comply with the new regime of the United Kingdom Financial Conduct Authority (FCA).
Through the new UK domain, the exchange will ensure that it offers local retail users only certain products and services that are permitted under the latest regulations. These will include spot and margin cryptocurrency trading, Binance Pay, the non-fungible token (NFT) marketplace, lending and others, according to the notice.
According to Binance, the newly established UK domain, www.binance.com/en-GB, ensures that only services that comply with current marketing regulations can be accessed. This encompasses services such as fiat and crypto transactions, spot trading, margin trading, Binance payment, and cryptocurrency-backed loans. Conversely, certain Binance offerings will be off-limits to UK users, including features such as Binance gift cards, academia, research, feeds, and referral bonuses.
What Are the New FCA Rules?
The new updates require exchanges to provide fair warning to customers about the risks involved in cryptocurrency investments. Marketing material must be “clear, fair and not misleading” and include a 24-hour cooling-off period for new customers.
While the regulator extended the deadline to implement technically difficult features such as the cooling-off period until January 2024, it requires companies to adhere to the “fundamental rules” from October 8.
Non-compliance will be considered a “criminal offense punishable by an unlimited fine and/or up to two years in prison” for domestic and foreign exchanges operating in the United Kingdom, the agency said in a recent statement.
By Leonardo Pérez
