Crypto exchanges, such as Coinbase, Crypto.com and Gemini, have requested U.K. users to pass risk assessments and complete questionnaires pertaining to their financial understanding. These steps are in response to new guidelines in the U.K., which mandate crypto enterprises to inform customers of the associated dangers in trading cryptocurrencies and promote their services responsibly. Those who are unable to successfully finish the assessments won't be permitted to trade with their crypto account.
Cryptocurrency exchanges such as Coinbase, Crypto.com and Gemini are advising users in the U.K. to begin filling out risk evaluations and investment questionnaires which evaluate their familiarity with finance. The notice is due to stricter regulations surrounding the advertising of digital asset products in the country. Starting Jan. 8, customers must complete a declaration indicating their investor profile (high-net-worth individual or restricted investor) and answer a questionnaire regarding financial services and regulations if they wish to continue using their respective platforms. The questions vary between exchanges but typically involve topics such as product range, crypto asset volatility, and the regulation of crypto. If unsuccessful, users will not be able to trade with their crypto account. The Financial Services and Markets Act of 2020 established that firms providing crypto and stablecoins must follow the same rules as those governing traditional finance. Additionally, as of Oct. 8, firms hoping to promote cryptoassets to customers must either be authorized or registered with the Financial Conduct Authority (FCA), or secure approval from an FCA-authorized company. Coinbase clarified these changes were intended to ensure UK investor protection rules were met. Similarly, Crypto.com reported the aim of the alterations was to ensure customers comprehend the risks associated with crypto investing. Despite the changes, both firms affirmed users should be minimally impacted and customer service teams are available for assistance with any queries. As an authorized Electronic Money Institution and registered cryptoasset business in the U.K., Crypto.com is compliant with FCA's rules and will continue to collaborate with the regulator as their product offering develops.
Coinbase CEO Brian Armstrong has actively voiced his support for the U.K. becoming a crypto hub, particularly in light of the company's challenges with the U.S. Securities and Exchange Commission alleging securities law violations. He gave an interview to CNBC's Arjun Kharpal in April last year expressing that Coinbase was looking to invest beyond the U.S. and had intentions to invest more in the U.K. to solidify its position as a crypto hub. Nevertheless, the recent financial advertising regulations have caused several crypto firms to pause services in the U.K. For instance, ByBit, an unlicensed crypto company, has ceased providing operations for U.K. customers while Luno has discontinued some U.K. customers from making crypto investments. In the meantime, PayPal has stopped a few of its crypto services until the business is able to abide by the new rules. Binance, already on thin ice with the U.S. after a massive $4.3 billion money-laundering penalty, attempted to get its marketing voluntarily authorized in the U.K. with a third-party firm back in October. Nonetheless, the FCA refused its attempts, saying it was doing so to protect consumers.
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