Crypto exchanges Coinbase, Crypto.com and Gemini conduct user risk assessments in the UK.
Posted: January 5, 2024 9:42 AM Updated: January 5, 2024 9:43 AM
Correction and fact check date: January 5, 2024, 9:42 AM
briefly
Coinbase, Crypto.com and Gemini have informed UK users that they will need to complete a risk assessment to maintain access to their platforms.
Cryptocurrency exchanges Coinbase, Crypto.com and Gemini have informed UK users that from January 8 they will need to complete a risk assessment and investment questionnaire designed to assess their financial knowledge in order to maintain access to their respective platforms.
Users must complete a declaration indicating their investor profile, choosing between being a high net worth person earning more than £100,000 (approximately $126,700) per year, or having a net worth exceeding £250,000.
Alternatively, users can choose to become a “restricted investor,” limiting their investments to no more than 10% of their assets.
Financial questionnaires, which vary from exchange to exchange, additionally ask users to answer numerous questions about the range of products offered by the company, the volatility of cryptocurrency asset prices, and how cryptocurrencies are treated as products according to financial regulators.
If the customer fails to complete the task, cryptocurrency account trading will be restricted. The new requirements come ahead of strict new rules for advertising digital asset products in the country.
Enforcement of Financial Services and Markets Law
Since the enactment of the Financial Services and Markets Act, a significant part of the UK’s financial services reforms, companies offering cryptocurrencies and certain types of digital currencies known as stablecoins have been subject to the law. They are obliged to comply with the same regulations that apply to traditional financial services.
Currently, companies wishing to advertise cryptocurrency assets to retail customers in the UK must either be authorized or registered with that country’s Financial Conduct Authority (FCA) or obtain marketing approval from an FCA-approved body.
Cryptocurrency Companies Navigating the UK’s Regulatory Landscape
Several cryptocurrency companies have acknowledged the regulatory requirements and confirmed their commitment to act in accordance with the new regulations.
Coinbase has embraced these changes, recognizing that they have been implemented to align with UK investor protection standards. This adjustment also signals Coinbase’s commitment to foster partnerships with local regulators with the goal of optimizing services for users.
Crypto.com announced that it expects the introduction of the new requirements to have minimal impact on user activity in the UK, and that its customer service team will continue to be available to assist with any enquiries.
However, recently implemented financial advertising regulations have caused problems for some cryptocurrency companies, causing their services to be suspended in the UK.
Unregistered cryptocurrency exchange ByBit suspended services to UK customers, and Luno announced the suspension of cryptocurrency investments for certain UK customers. Additionally, PayPal has suspended certain cryptocurrency services until the cryptocurrency sector meets new regulatory requirements.
Recently, Binance attempted to secure marketing approval in the UK through a third-party company. However, the Financial Conduct Authority (FCA) intervened and blocked this, citing consumer protection as the main motivation for the decision at the time.
As UK cryptocurrency exchanges implement new user assessments and questionnaires, the industry faces increased regulatory scrutiny to address compliance issues, reflecting the wider landscape of regulatory change in the UK.
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Alisa is a reporter for Metaverse Post. She focuses on everything related to investing, AI, metaverse, and Web3. Alisa holds a degree in Art Business and her expertise lies in the fields of art and technology. She developed a passion for journalism through writing about VCs, notable cryptocurrency projects, and participating in science writing.
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alice davidson
Alisa is a reporter for Metaverse Post. She focuses on everything related to investing, AI, metaverse, and Web3. Alisa holds a degree in Art Business and her expertise lies in the fields of art and technology. She developed a passion for journalism through writing about VCs, notable cryptocurrency projects, and participating in science writing.
more articles