Crypto Exchange Coinbase, Crypto.com and Gemini Conduct User Risk Assessments in UK
Coinbase, Crypto.com and Gemini informed users in UK that they will be required to complete a risk assessment to maintain access to platforms.
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.
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