Crypto companies Coinbase and OKX have forged agreements with the crypto startup Archax to secure approval for their financial promotions. Simultaneously, Binance announced its partnership with Rebuilding Society, a peer-to-peer lending firm.
The United Kingdom’s Financial Conduct Authority (FCA) has placed other exchanges, such as HTX and KuCoin, on a warning list due to their unauthorized status.
While some exchanges decided to leave the UK market due to its new crypto marketing rules, such as Bybit, several foreign exchange platforms have adapted to the new situation by embracing local partners. The objective of these partnerships is to enable the exchanges to continue serving UK customers from abroad, even with the implementation of new marketing regulations by the FCA, which include a cooling-off period for first-time investors.
The partners responsible for approving promotions in these arrangements take on the responsibility for those promotions, creating a symbiotic relationship.
On 8 October, the FCA issued a warning listing 143 entities operating in the UK without permission, including major global exchanges HTX and KuCoin. The warning advises the public to avoid dealing with these firms.
Prior to the FCA's new marketing rules, offshore exchanges had more freedom to offer services in the UK. The new regulations extend the reach of financial promotions rules, prompting exchanges to seek approval for their promotions.
Archax, an early addition to the FCA's anti-money laundering crypto register, has taken on roughly half of the clients seeking assistance with promotion approvals. The FCA's new regime for crypto asset financial promotions came into effect on the same day - 8 October, with additional technical developments required by 8 January 2024.
These rules apply to crypto promotions across various media platforms, and unregistered crypto asset firms must follow specific routes to lawfully communicate promotions in the UK.
The four routes for lawful communication include promotions by an FCA-authorized person, approval by an authorized person, communication by a crypto firm registered under FCA's anti-money laundering regulations (as employed by Coinbase, OKX, and Binance), and compliance with conditions outlined in the Financial Promotion Order.
Non-compliance with the new financial promotions guidelines may result in a breach of the UK's Financial Services and Markets Act 2000, a criminal offense punishable by up to two years imprisonment, an unlimited fine, or both.
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