In response to the new Financial Promotions (FinProm) Regime introduced by the Financial Conduct Authority (FCA) of the United Kingdom, major global cryptocurrency exchanges, including Binance and OKX, have announced measures to ensure compliance with the stringent regulations aimed at promoting transparency and fair practices within the crypto industry.
Binance’s compliance measures
On October 6, 2023, Binance, one of the world’s largest cryptocurrency exchanges, unveiled a series of changes designed to adhere to the new UK regulations. As part of its efforts, Binance launched a new domain exclusively for its UK-based users and forged a partnership with the local peer-to-peer lending platform, Rebuildingsociety.
Effective October 8, 2023, retail users accessing Binance from the UK will be redirected to the localized domain. This domain will exclusively showcase products and services compliant with UK regulations, including spot and margin trading, Binance Pay, the nonfungible token (NFT) marketplace, loans, and more. Notably, the exchange will cease offering products such as gift cards, referral bonuses, academy, and research services in accordance with the new FCA rules.
It is essential to underline that these changes will solely impact retail users in the UK, exempting certain institutional and professional investors who fall under the new FinProm rules.
Likewise, OKX, another prominent cryptocurrency exchange, issued a statement on October 6, 2023, addressing its commitment to FinProm compliance. OKX has scaled down its token offerings to approximately 40 assets and introduced prominent risk warnings on its platform interface. One such warning, prominently displayed at the top of OKX’s main page, explicitly cautions investors about the high-risk nature of crypto investments, underscoring the potential loss of invested capital.
Additionally, OKX has established a dedicated U.K. account on X, formerly known as Twitter. Through this account, the exchange pledges to inform its audience about the products and services that align with the new U.K. regulations, bolstering transparency and investor protection.
Challenges for crypto firms in compliance
The introduction of the FinProm regulations has posed challenges for cryptocurrency firms operating on a global scale. Ensuring compliance with varying regulatory frameworks across different countries can be intricate and demanding. According to Matt Sullivan, the deputy general counsel of crypto payment service MoonPay, navigating these regulations presents a substantial challenge for businesses with a global presence.
On October 8, 2023, the FCA issued official statements revealing that some crypto exchanges may have been promoting their services without proper authorization. Among the entities listed as “non-authorized firms” that are prohibited from operating in the United Kingdom were major crypto exchanges, including Huobi-owned HTX (formerly Huobi) and KuCoin. A total of 143 entities were added to this warning list, each accompanied by the caution, “You should avoid dealing with this firm.”
