The UK Financial Conduct Authority (FCA) has expanded its warning list to include major cryptocurrency exchanges Huobi (HTX) and KuCoin, citing concerns about improper marketing in the UK. The FCA’s move comes as part of its efforts to enforce new financial promotion regulations that require crypto asset service providers to display clear risk warnings to UK-based consumers and adhere to higher technical standards, including a mandatory 24-hour cooling-off period for new customers.
In response to the FCA’s action, Huobi denied operating or marketing its services in the UK. Meanwhile, KuCoin expressed its commitment to adjusting its products and services to ensure compliance with relevant laws and regulations in each country.
Justin Sun, the crypto magnate overseeing Huobi, previously faced regulatory challenges when the US Securities and Exchange Commission accused him of fraudulent activities and market manipulation involving TRX, the primary cryptocurrency of the Tron blockchain.
Huobi has licenses for operations in various locations like Lithuania, Gibraltar, Dubai, Australia, the British Virgin Islands, and South America. Notably, the UK is not among the regions where it is explicitly prohibited.
Compliance Challenges for UK Crypto Businesses Amid Growing Regulations
The UK FCA’s warning list now includes 147 companies and penalties for non-compliance can range from takedown requests for websites and apps to unlimited fines and even prison time.
From September 1, crypto businesses in the UK are obligated to collect, verify, and share information about crypto transfers, referred to as the ‘Travel Rule.’ The regulation aligns with the Financial Action Task Force’s (FATF) call for global implementation of the Travel Rule, aiming to standardize practices across crypto businesses similar to businesses in traditional financial services.
Meanwhile, major global cryptocurrency exchanges like Binance and OKX have announced their efforts to comply with the new financial promotion regulations in the UK, emphasizing transparency and consumer protection. Binance has launched a localized domain for UK users, while OKX has reduced its token offering and incorporated eye-catching risk warnings.
The changes will apply exclusively to retail users in the UK and exempt certain institutional and professional investors.
Compliance with the new rules remains a challenge for crypto businesses, as they must navigate varying regulations in different regions while ensuring that their services are aligned with the evolving legal landscape.
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