Leading cryptocurrency exchanges like Coinbase, Crypto.com, and Gemini are informing UK users about mandatory risk assessments and financial knowledge tests. This proactive measure precedes stringent rules on advertising digital asset products in the UK.
Starting Monday, users in the UK must complete a declaration indicating their investor profile and respond to a financial questionnaire to continue using these platforms. The declaration includes options for high net worth individuals and restricted investors. Failing to comply will restrict users from trading crypto on these platforms.
The financial questionnaires cover various aspects, such as the firms’ product offerings, the volatile nature of crypto asset prices, and the regulatory treatment of crypto products. Failure to successfully complete these tasks will result in trading restrictions.
These changes follow the Financial Services and Markets Act, subjecting crypto firms to the same rules as traditional financial services. Since October 8, firms promoting cryptoassets to UK retail customers must be authorized or registered with the Financial Conduct Authority (FCA) or have their marketing approved by an FCA-authorized firm.
Coinbase and Crypto.com have justified these changes as measures to comply with UK investor protection standards and to ensure users understand the risks associated with cryptocurrency investments. These adjustments align with the FCA’s efforts to enhance consumer protections in the crypto space.
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While some crypto companies have suspended services in the UK due to the new rules, others like Coinbase CEO Brian Armstrong view the UK as a significant crypto hub. However, these regulatory changes present challenges for crypto firms, with some opting to suspend services or face marketing authorization hurdles in the evolving regulatory landscape.