UK financial regulators are following in FTX’s footsteps. The Financial Conduct Authority says cryptocurrency exchange FTX may offer financial services or products in the UK without a license.
FTX One of the largest cryptocurrency exchanges in the world. This year, it increased its presence by backing digital asset platforms that were in decline as cryptocurrency prices fell.
While other crypto exchanges are feeling the effects of the ongoing crypto winter, FTX continues to grow. In fact, his 2021 earnings reportedly increased by 1,000% to reach $1.02 billion. And despite current market conditions, there are no signs of slowing down. After ending the first quarter with $270 million, it is expected to bring in $1.1 billion in revenue in 2022.
regulator Around the world, there is still a debate about how best to regulate the cryptocurrency business. The FCA said in July that it needed global rules to govern international crypto companies and “keep the market clean.” FTX has yet to respond to the allegations made by the UK financial regulator.
Almost all companies and individuals offering, promoting or selling financial services or products in the UK must be approved or registered with us. […]This company is not licensed by us and is intended for UK people.
Additionally, the Financial Times reports that FTX has stopped offering cryptocurrency derivatives services to UK retail customers. This was followed by his FCA ban on the sale and distribution of cryptocurrency derivative products to retail traders.
Meanwhile, the FCA’s criticism of FTX wasn’t the first time it had sounded the alarm bells for cryptocurrency companies.criticized last year binancecommitted to abide by the law as a result.
Following regulatory approval, Switzerland-based FTX’s European arm announced its ambition to enter the UK market earlier this year. However, due to the current situation, any expansion plans that FTX had may be cancelled.
In April of this year, the UK made its crypto asset registry permanent. This requires all companies with cryptocurrency activities in the country to meet the FCA’s anti-money laundering standards. Several large companies such as Gemini, Kraken and Crypto.com are registered, while others such as FTX coin baseWhen binance UK consumers still have access to all this, but they don’t.
FTX falls under FCA crypto regulations
In January 2020, new regulations focused on cryptocurrencies were enacted, allowing the FCA to oversee companies operating in this space and to enforce AML and counter-terrorism financing regulations. rice field. An FCA spokesperson explained this in August.
Successful registration depends on companies meeting the minimum standards expected to prevent money laundering and terrorist financing, too many financial crime red flags that crypto businesses seeking registration miss. I have seen many.
The direct impact on unregistered entities is unknown, but the FCA has been muted in its enforcement. UK ePayments, one of his largest electronic payment providers, shut down on September 13th.
The Federal Trade Commission (FTC), like other companies, has been watching the company closely in recent weeks. On August 19th, the Federal Deposit Insurance Corporation (FDIC) sent FTX a compulsory letter alleging that it misled a customer about having certain cryptocurrency-related services covered by his FDIC. did.
According to the FCA Guide, cryptocurrency exchanges and wallet providers must register with the FCA for anti-money laundering supervision if digital asset activity takes place in the UK.
How Will Crypto Regulation Affect Investors?
The FCA and other financial regulators around the world have tried to protect consumers and set standards. crypto market. However, this has been difficult as many of the largest groups are based in offshore jurisdictions. FTX and Binance, which is registered in the Cayman Islands, created a US affiliate to appease US authorities, but continues to offer its services from an international base.
For UK clients to deal with FTX, They do not have access to the same standard consumer protection in the UK. This includes the Financial Ombudsman and the Financial Services Compensation Scheme. Basically, these consumers are unlikely to get their money back if something goes wrong.
Depending on the country’s crypto regulations, investors could face serious consequences. For example, trading cryptocurrencies can be more difficult in countries with strict cryptocurrency exchange rules.
Alternatively, suppose there are countries with weak or non-existent encryption rules. This can create a Wild West-style environment in which investors are more likely to be deceived or otherwise adversely affected. In a nutshell, investors should understand the crypto regulatory landscape of a particular country before investing in it.