Users in the United Kingdom are being warned by Coinbase, Crypto.com, Gemini, and other cryptocurrency exchanges that they will need to begin filling out risk assessments and investing questionnaires intended at assessing their financial understanding.
- IMPORTANT NOTES
- Coinbase, Crypto.com, and Gemini are among the cryptocurrency exchanges that require U.K. consumers to complete risk assessments and financial knowledge surveys.
- The changes are in reaction to new legislation in the United Kingdom that compel cryptocurrency companies to explain to customers the risks of trading cryptocurrencies and to advertise their services appropriately.
- If a customer fails to fulfill the tasks successfully, they will be barred from trading with their cryptocurrency account.
It comes as the country prepares to implement strict new rules governing the advertising of digital asset goods. To continue using their respective platforms, users in the United Kingdom will be forced to complete a declaration about what type of investor they are, as well as respond to a questionnaire on a variety of financial services and legislation, beginning Monday.
Users are requested to select their investor profile in the customer declaration section: either a high net worth individual earning more than £100,000 (approximately $126,700) per year or with a net worth of more than £250,000, or a “restricted investor” who will not invest more than 10% of their assets. Otherwise, they will be unable to exchange cryptocurrency.
The financial questionnaires, which differ from exchange to exchange, demand users to answer various questions regarding the products that the firms offer, the unpredictable nature of crypto asset prices, and how financial regulators treat crypto as a product. If a customer fails to successfully complete the requirements, they will be barred from trading with their cryptocurrency account.
Firms that offer crypto and a type of digital currency known as stablecoins are now covered by the Financial Services and Markets Act, a major package of financial services reforms in the United Kingdom, and must adhere to the same rules that govern traditional financial services. Since October 8, firms intending to promote cryptoassets to retail customers in the United Kingdom must be authorized or registered with the Financial Conduct Authority, or have their marketing approved by an FCA-sanctioned firm.
Coinbase stated that the adjustments 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 representative said in an email.
According to a Crypto.com spokeswoman, the adjustments 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 have an impact on 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 U.K. general manager, told 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 said in a statement.
Crypto firms in a tight spot
Coinbase CEO Brian Armstrong has been a vocal supporter of the United Kingdom’s role as a crypto hub, particularly as the exchange faces more scrutiny at home, with the Securities and Exchange Commission prosecuting the company for potential securities law violations. In April of last year, he told Arjun Kharpal that Coinbase was “looking at other markets” to invest in outside of the United States, and that it was “probably going to invest more” in the United Kingdom, given the company’s desire to position itself as a crypto hub.
However, the new financial advertising restrictions have put some cryptocurrency companies in a bind. In response to the new laws, some cryptocurrency companies have ceased their operations in the United Kingdom. ByBit, an unregistered cryptocurrency firm, has suspended services to U.K. consumers, while Luno has stated that it is prohibiting some U.K. clients from making cryptocurrency investments. Meanwhile, PayPal has said that it will suspend some bitcoin services until its crypto unit complies with the new standards.
Binance, which was fined $4.3 billion by US authorities last year for money laundering accusations, attempted to get its marketing allowed in the United Kingdom through a third-party agency in October. The FCA, however, halted it, claiming that it was doing so to safeguard consumers.
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