The companies told users in Britain that from January 8, they will be asked to complete a declaration about the type of investors they are, and respond to a questionnaire asking questions about a range of aspects of financial services and regulation for continued use. Their platforms.
In the client declaration section, users are asked to select their investor profile: either a high-net-worth individual earning more than £100,000 (about US$126,700) per year or with a net worth of more than £250,000, or a “restricted investor” who has won no It invests more than 10% of its assets. Otherwise, they will not be able to trade cryptocurrencies.
The financial questionnaires, which vary from one exchange to another, require users to answer several questions about the range of products offered by companies, the volatile nature of crypto asset prices, and the treatment of cryptocurrencies as a product by financial regulators.
If the client fails to complete the tasks successfully, he will be banned from trading using his crypto account.
Since the passage of the Financial Services and Markets Act, a major package of financial services reforms in the UK, companies offering cryptocurrencies and a specific 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 October 8, companies seeking to promote crypto assets in the UK to retail clients must be authorized or registered with the country's Financial Conduct Authority (FCA), or be approved for marketing by an FCA authorized firm. .
Coinbase said the changes were made “to ensure we meet UK investor protection standards, which require our users to have the knowledge to make informed investment decisions.”
“This process is also part of Coinbase’s commitment to working collaboratively with local regulators so we can better serve our users now and in the future,” a Coinbase spokesperson told CNBC via email.
A Crypto.com spokesperson gave similar reasons for the move, saying the changes were made “primarily to ensure customers understand the risks of investing in cryptocurrencies, which is a key element of the FSA's important consumer protections.”
“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, Crypto.com's UK general manager, told CNBC via email.
“As an authorized e-money institution and UK-registered crypto-asset business, Crypto.com supports and adheres to the FCA rules and will continue to work with the regulator as we expand our product offerings here,” Tucker added.
Coinbase CEO Brian Armstrong has been supportive of the UK's role as a cryptocurrency hub, especially as the exchange faces a tougher time at home as the US Securities and Exchange Commission sues the company for securities law violations.
In April last year, he told CNBC's Arjun Kharpal that Coinbase was “looking at other markets” to invest in outside the US and “potentially investing more” in the UK, given its efforts to position itself as a cryptocurrency hub.
But new financial advertising regulations have put some cryptocurrency companies in an awkward position.
Some cryptocurrency companies have suspended their services in the UK in response to the new rules. ByBit, an unregistered cryptocurrency company, has suspended its services to UK customers, while Luno said it is blocking some UK customers from making investments in cryptocurrencies. Meanwhile, PayPal said it would suspend some cryptocurrency services until it brings its cryptocurrency arm into compliance with the new rules.
Binance, which was slapped with a $4.3 billion settlement by US authorities over money laundering charges last year, in October tried to obtain its UK marketing license with an offshore company. But it was banned by the Financial Supervision Authority, which said at the time it was doing so to protect consumers.
