In a bold move aimed at safeguarding consumers, the FCA added 145 digital asset companies, including major exchanges Huobi-owned HTX and KuCoin, to its warning list.
This decision follows the FCA’s expansion of regulations to include cryptoasset service providers, regardless of their geographical location.
Cracking Down on Crypto
The United Kingdom’s Financial Conduct Authority (FCA) has taken a decisive step in its efforts to safeguard consumers and regulate the growing crypto industry.
We’ve issued 26 new #FCAwarnings to unauthorised and clone firms in the last 7 days.
— Financial Conduct Authority (@TheFCA) October 6, 2023
On Oct. 8, the FCA expanded its warning list of non-authorized firms, adding 145 digital asset companies, including prominent exchanges Huobi-owned HTX and KuCoin. In the statement, FCA asserted:
“Promoting financial services or products without our permission is forbidden. Avoid dealing with these firms.”
In the UK, companies engaged in cryptocurrency operations must either be registered with the FCA or have obtained provisional permission to operate. Jayson Probin, the FCA’s lead for cryptocurrency financial promotions, emphasized in July that failure to comply could result in legal prosecution.
Failure to comply with FCA rules may lead to severe consequences, including website takedowns, substantial fines, and even legal action. Lucy Castledine, the FCA’s Director of Consumer Investments, emphasized the watchdog’s commitment to promptly identify and address crypto firms that breach the expanded rules, stating,
“We aim to be swift in calling out crypto firms that breach our expanded rules.”
Huobi and KuCoin Respond
Huobi and KuCoin wasted no time responding to their inclusion on the FCA’s warning list. A spokesperson for the former asserted that the firm “does not operate or market its services or products in the UK.” However, it’s important to note that the FCA’s jurisdiction extends to any company dealing with UK consumers, regardless of geographical location.
KuCoin’s CEO, Johnny Lyu, expressed the company’s commitment to complying with laws and regulations in each country they operate in. Despite being headquartered in the Seychelles and restricting operations in certain regions, the UK is not among the places they exclude.
The FCA’s warning list holds value for consumers as it assists in identifying companies that require caution. The agency emphasized in its statement that engaging with unapproved firms can potentially lead to losing access to critical services like the Financial Ombudsman Service or the Financial Services Compensation Scheme (FSCS), which can prove detrimental if complications arise.