The firms have told users in Britain that, starting Jan. 8, they will be required to complete a declaration about what type of investor they are, and respond to a questionnaire asking questions on a range of aspects of financial services and regulation to continue using their respective platforms.
In the customer declaration section, users are asked to select their investor profile: either high-net-worth individual earning above £100,000 (roughly $126,700) annually or with a net worth of more than £250,000, or a “restricted investor” that won’t invest more than 10% of their assets. Otherwise, they cannot trade crypto.
The financial questionnaires, which vary from exchange to exchange, require users to respond to numerous questions about what range of products the firms offer, the volatile nature of crypto asset prices, and the treatment of crypto as a product by financial regulators.
If a customer fails to complete the tasks successfully, they will be prevented from trading with their crypto account.
Since the passing of the Financial Services and Markets Act, a major package of financial services reforms in the U.K., firms that offer crypto and a certain type of digital currency called stablecoins are now covered by the law and must adhere to the same rules as those that govern traditional financial services.
Since Oct. 8, firms seeking to promote cryptoassets in the U.K. to retail customers must be authorized or registered with the country’s Financial Conduct Authority (FCA), or have their marketing approved by an FCA-authorized firm.
Coinbase said that the changes were made “to ensure we are meeting UK investor protection standards, which require our users to have the necessary knowledge to make informed investment decisions.”
“This process is also part of Coinbase’s commitment to working collaboratively with local regulators so that we can best serve our users now and in the future,” a Coinbase spokesperson told CNBC via email.
A Crypto.com spokesperson gave similar reasoning for the move, saying its changes were made “primarily to ensure customers understand the risks of investing in cryptocurrency, which is a key component of the important consumer protections being put in place by the FCA.”
“We do not expect this to impact user activity in the UK and as always our customer service team is on hand to help with any queries,” George Tucker, U.K. general manager of Crypto.com, told CNBC via email.
“As an authorised Electronic Money Institution and registered cryptoasset business in the U.K., Crypto.com supports and complies with the FCA’s rules and will continue to work with the regulator as we expand our product offering here,” Tucker added.
Coinbase CEO Brian Armstrong has been advocate of the U.K.’s role as a crypto hub, particularly as the exchange faces a tougher time at home with the U.S. Securities and Exchange Commission suing the firm over securities law violations.
In April last year, he told CNBC’s Arjun Kharpal that Coinbase was “looking at other markets” to invest in beyond the U.S. and was “probably going to invest more” in the U.K., given in its push to position itself as a crypto hub.
But the new financial advertising regulations have put some crypto firms in a tight spot.
Some crypto companies have suspended their services in the U.K. in response to the new rules. ByBit, an unregistered crypto firm, halted services to U.K. customers, while Luno said it is halting some U.K. clients from making crypto investments. PayPal, meanwhile, said it is suspending some crypto services until it brings its crypto arm into compliance with the new rules.
Binance, which was slapped by U.S. authorities with a $4.3 billion settlement over money laundering charges last year, tried in October to get its marketing authorized in the U.K. with a third-party firm. But it was blocked by the FCA, which at the time said it was doing so to protect consumers.
This news is republished from another source.
