Digital assets exchange Bybit, which cited early this month that new marketing rules in the UK would hinder its operations, will no longer accept new account applications from UK residents, starting October 1.
The new rules, announced by the UK’s Financial Conduct Authority (FCA), apply to all crypto promotions including the ban on incentives like referral bonuses. The regulator said that the rules will come into effect from Oct. 8.
To stay on the right side of FCA’s guidelines, crypto exchange Bybit will suspend its services in the UK market starting October 8. “Bybit has made a choice to embrace the regulation proactively,” the platform said in a press release.
Existing UK users “will no longer be able to make any new deposits, create new contracts, or increase any of their existing positions for all products and services” from October 8, it added.
Further, UK customers are encouraged to wind down their positions by January 8, 2024. Post the deadline, open positions will be liquidated, the company noted.
FCA’s action to scrutinize crypto businesses to comply with its new marketing rule is “clear, fair and honest,” said Lucy Castledine, Director of Consumer Investments at FCA.
“As a proportionate regulator, we’re giving firms that apply a little more time to get the other reforms requiring technology and business change right,” she said at the time.
The move comes as regulators worldwide are concerned by the failure of global crypto businesses such as FTX and the tightening of rules denote increased regulatory oversight over crypto firms.
Bybit confirmed that it would continue to grow in global markets and its “mission to deliver next level trading experiences to all crypto believers with the necessary guardrails in place.”
FCA’s “Final Warning”
Bybit’s exit from the UK market follows FCA’s “final warning” to crypto businesses about the upcoming financial promotions regime.
The regulator said in a September 21 letter that all firms promoting cryptoassets to UK consumers must get ready for this regime.
“This regime is important for reducing and preventing harm to consumers from investing in cryptoassets that do not match their risk appetite,” the watchdog wrote. “The regime will also create a fairer and more consumer-focused landscape in which firms can compete and innovate.”
The letter further noted that due to the regulatory tightening, many overseas crypto asset firms refused to engage with the FCA and only 24 out of 150 firms responded to a survey sent by the regulator.
“If unregistered cryptoasset firms continue to promote cryptoassets to UK consumers once the regime enters into force, they are likely to be in breach of section 21 of the Financial Services and Markets Act 2000 (FSMA). This would be a criminal offense punishable by up to 2 years imprisonment, an unlimited fine, or both.”
The financial regulator also warned intermediaries such as social media platforms and search engines, app stores and payment firms to ensure unregistered crypto businesses do not promote illegal marketing to UK users.