Business News Report
January 05, 2024

Crypto Exchange Coinbase, Crypto.com and Gemini Conduct User Risk Assessments in UK

Cryptocurrency Exchanges  Coinbase, Crypto.com, and Gemini Impose User Assessments in UK

Cryptocurrency exchanges Coinbase, Crypto.com and Gemini informed users in the United Kingdom that, beginning January 8, they are required to complete risk assessments and investment questionnaires designed to evaluate their financial knowledge to maintain access to their respective platforms.

Users will need to complete a declaration indicating their investor profile, choosing between being a high-net-worth individual earning above £100,000 (approximately $126,700) annually or possessing a net worth exceeding £250,000.

Alternatively, users can opt to be a “restricted investor” limiting their investment to no more than 10% of their assets.

The financial questionnaires, which vary from exchange to exchange, will additionally require users to answer numerous questions about the range of products offered by the firms, the volatile nature of cryptocurrency asset prices, and the treatment of cryptocurrency as a product according to financial regulators.

If a customer fails to complete the tasks, they will be restricted from trading with their cryptocurrency account. The new requirement comes ahead of the tough new regulations on the advertising of digital asset products in the country.

Financial Services and Markets Act in Action 

Since the enactment of the Financial Services and Markets Act, a substantial set of financial services reforms in the UK, companies offering cryptocurrency and a specific type of digital currency known as stablecoins fall under the purview of the law. They are obligated to comply with the same regulations that govern traditional financial services. 

Presently, companies intending to advertise cryptocurrency assets to retail customers in the UK must be authorized or registered with the country’s Financial Conduct Authority (FCA) or have their marketing sanctioned by an FCA-authorized entity.

Crypto Firms Navigate UK’s Regulatory Landscape

Several cryptocurrency companies have acknowledged the regulatory requirements and affirmed their commitment to acting in accordance with the new regulations. 

Coinbase has embraced these changes, recognizing that they are implemented to align with UK investor protection standards. This adjustment is also a manifestation of Coinbase’s commitment to fostering collaborative engagement with local regulators, aiming to optimize services for users.

Crypto.com announced that the introduction of the new requirement is anticipated to have minimal impact on user activity in the UK, noting that the customer service team remains available to assist with inquiries. 

However, the recently implemented financial advertising regulations have also posed challenges for some cryptocurrency firms, leading them to suspend their services in the UK. 

The unregistered cryptocurrency exchange ByBit ceased services for UK customers, and Luno announced the suspension of cryptocurrency investments for certain UK clients. Additionally, PayPal has suspended certain cryptocurrency services until it aligns its cryptocurrency arm with the new regulatory requirements.

Recently, Binance attempted to secure authorization for its marketing in the UK through a third-party firm. However, the Financial Conduct Authority (FCA) intervened and blocked the endeavor, citing consumer protection as the primary motive for their decision at that time.

As UK cryptocurrency exchanges implement new user assessments and questionnaires, the industry faces increased regulatory scrutiny, grappling with compliance challenges, reflecting the broader landscape of regulatory changes in the UK.

Disclaimer

In line with the Trust Project guidelines, please note that the information provided on this page is not intended to be and should not be interpreted as legal, tax, investment, financial, or any other form of advice. It is important to only invest what you can afford to lose and to seek independent financial advice if you have any doubts. For further information, we suggest referring to the terms and conditions as well as the help and support pages provided by the issuer or advertiser. MetaversePost is committed to accurate, unbiased reporting, but market conditions are subject to change without notice.

About The Author

Alisa is a reporter for the Metaverse Post. She focuses on investments, AI, metaverse, and everything related to Web3. Alisa has a degree in Business of Art and expertise in Art & Tech. She has developed her passion for journalism through writing for VCs, notable crypto projects, and scientific writing. You can contact her at [email protected]

More articles
Alisa Davidson
Alisa Davidson

Alisa is a reporter for the Metaverse Post. She focuses on investments, AI, metaverse, and everything related to Web3. Alisa has a degree in Business of Art and expertise in Art & Tech. She has developed her passion for journalism through writing for VCs, notable crypto projects, and scientific writing. You can contact her at [email protected]

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