In a recent move to regulate the crypto market, the UK's Financial Conduct Authority (FCA) has broadened its financial promotion regulations to include all cryptoasset service providers. The new rules, effective from Monday, require these firms to display risk warnings and implement a 24-hour cooling-off period for new customers. Non-compliant firms could face severe penalties, including website or app takedowns, unlimited fines, or even imprisonment.
On Sunday, October 8, 2023, two major crypto exchanges, HTX and KuCoin, were added to the FCA's warning list for operating without the required permissions. This indicates that users dealing with these firms will no longer have access to the Financial Ombudsman Service for dispute resolution or the Financial Services Compensation Scheme (FSCE) for compensation claims in case of firm collapse.
The FCA has also warned leading crypto exchanges such as Huobi and 147 other firms for marketing their services without proper authorization. While Huobi denies operating in the UK, KuCoin and Binance have demonstrated their commitment to compliance - the latter by unveiling its UK domain.
In addition to exchanges, the FCA is also monitoring crypto custodial solution providers. Recently, it licensed Komainu as a custodian wallet provider, allowing its platform, Komainu Connect, to provide collateral management services.
The new regulations also mandate FCA registration and advertising approval by an FCA-authorized firm. Firms can apply for flexibility to make necessary back-office changes. Notably, several companies including Revolut, Binance, and Coinbase (NASDAQ:COIN) have already adopted these changes and informed customers via email notifications.
Lucy Castledine from the FCA confirmed to Bloomberg News that they are constantly updating the list of regulatory violators. The recent actions highlight the increasing scrutiny of crypto firms by regulators worldwide as they aim to protect consumers in the rapidly expanding digital asset market.
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