UK Watchdog Adds Crypto Exchanges to Warning List
The UK’s Financial Conduct Authority (FCA) has expanded its warning list to include nearly 150 digital asset companies, including crypto exchanges HTX and KuCoin.
Promotion without approval
These firms have been added to the list due to their promotion of services in the UK without obtaining the necessary regulatory approvals. The move comes as the FCA strengthens its oversight of the cryptocurrency sector.
The FCA recently broadened its rules on financial promotions, effective from October 8, to encompass crypto-asset service providers, regardless of their geographical location. This means that all crypto platforms are now obligated to display clear risk warnings to UK-based consumers and adhere to more rigorous technical standards. Additionally, they must implement a mandatory 24-hour cooling-off period for new customers.
Exchanges respond
In response to the inclusion of their platforms on the FCA’s warning list, both HTX and KuCoin issued statements. A spokesperson for HTX, known until recently as Huobi, clarified that the firm does not operate or market its services in the UK. KuCoin, on the other hand, acknowledged that it doesn’t operate in the UK but expressed its commitment to adapt its products and services to ensure compliance with the relevant laws and regulations in each country.
Another exchange, OKX, alongside global exchange Binance, have both indicated that they are working towards complying with the FCA’s regulatory requirements in respect of marketing.
The FCA issued a generic warning message for both HTX and KuCoin, stating:
“This firm may be promoting financial services or products without our permission. You should avoid dealing with this firm.”
Non-compliance with the FCA’s regulations can result in severe penalties, including takedown requests for websites and apps, substantial fines, and potential legal action, which could lead to imprisonment.
It’s worth noting that HTX Advisor, Justin Sun, has encountered regulatory challenges in the past. In March, the US Securities and Exchange Commission (SEC) accused Sun of fraud and market manipulation related to TRX, the native cryptocurrency of his Tron blockchain. Despite holding licenses to operate in various jurisdictions, HTX’s website does not specifically mention the UK as a prohibited venue.
KuCoin has its platform restricted in several countries, including the US, Singapore, Hong Kong, mainland China, Thailand, Malaysia, and Canada’s Ontario province. Notably, the UK is not listed among these restricted locations.
The FCA’s decision to rapidly identify and publicize crypto firms violating the expanded rules underscores increasingly stringent regulatory requirements. The regulator is continuously updating its list of violators as new infractions are uncovered. In August, the UK regulator published data that demonstrated that only 13% of crypto businesses who have applied to trade in the UK have been offered permits to do so.
Lucy Castledine, the FCA’s Director of Consumer Investments, emphasized the dynamic nature of the list, which is constantly evolving to keep pace with emerging issues within the crypto sector.
As the FCA takes a more proactive stance in overseeing crypto businesses, the warning list serves as a tool for consumer protection, signaling the importance of adherence to regulatory standards in the cryptocurrency ecosystem.
