Playing by the rules is the key for exchanges to survive intensified regulatory pressure, and it looks like there are some new rules in the UK.
Binance and OKX, the world's leading cryptocurrency exchanges, are working to ensure their operations comply with the updated Financial Promotions (FinProm) Regime in the UK.
On Oct. 6, Binance introduced a new domain for UK retail users in partnership with Rebuildingsociety.com, an FCA-authorized peer-to-peer lending firm.
Binance and OKX to Comply with Updated Rules
According to the announcement, the UK-specific domain only displays Binance products and services permitted in the UK, including fiat/crypto deposits and withdrawals, spot and margin trading, crypto conversion, Binance Pay, crypto loans, NFT marketplace, and launchpad.
Products and services that fail to comply with the regulations, including gift cards, academy, research, feed, and referral bonuses, are not available on the new domain, as noted in Binance's post.
While Binance launched a new domain, OKX made several updates on products and advertising activities. The exchange delisted a number of tokens, issued new risk warnings on its platform, and a new UK-target account on the social channel X.
Crypto assets are defined as financial instruments under the Financial Services and Markets Act 2000 (FSMA). This means that all promotions of crypto assets to UK consumers must be authorized by the FCA or be exempt from authorization.
The FCA's FinProm Regime is aimed at protecting consumers from the risks associated with investing in crypto-assets. Its top priority also includes ensuring that the cryptoasset market is fair and orderly.
On Oct. 8, the UK Financial Conduct Authority (FCA) introduced some important updates on the FinProm Regime. Those amendments most likely affect retail investors while some institutional and professional investors are unaffected.
With the updated rules, firms are prohibited from using misleading statements to promote crypto-assets. All promotions to UK consumers must provide clear and accurate information about the risks associated with crypto investment.
HBT, KuCoin, and 141 Other Firms on the Warning List
According to the FCA's report, some major exchanges, such as Bitstamp, Revolut, and Gemini, previously registered with the regulators and got the operating license. Since 2020, there have been only 42 approved entities, among 291 filings. This is considered a modest figure given the total number of businesses in the UK.
The FCA also listed 143 crypto-related non-authorized firms, warning customers to avoid them. Two remarkable names on the list are HBT (formerly Huobi) and KuCoin. However, the policymakers haven't detailed how they will treat those firms.
Jayson Probin, FCA Crypto Financial Promotions Lead, warned of possible criminal charges against non-approved entities.
"We will take robust action against persons illegally promoting to U.K. consumers. This may include, but it is not limited to, placing firms on our warning list requesting take downs of websites, social media accounts, apps and all other promotions that are in breach, and enforcement action," the FCA executive stated.
HBT and KuCoin are compelled to find ways to deal with the ongoing regulatory scrutiny, not only in the UK but also in other places worldwide. Previously, PayPal has reportedly worked to comply with the FCA's rules after pausing crypto transactions earlier this month.
Bybit, one of the major alternatives to Binance, OKX, HBT, and KuCoin, hit a similar roadblock. Last month, the exchange announced the suspension of its crypto services in the UK under legal pressure. There may be more new regulations coming.
Binance's effort to comply with regulations has come amid the legal battles between the firm and the U.S. Securities and Exchange Commission (SEC). The SEC accused Binance.US and its founder of violating the securities laws by operating an unregistered exchange business and mishandling customers' funds.
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