Cryptocurrency exchanges Coinbase, Crypto.com and Gemini have implemented risk assessments and finance tests for their users in the United Kingdom.
These measures are a response to new regulations set by the U.K. government, which require crypto companies to inform users about the risks associated with trading cryptocurrencies and to advertise their services responsibly, CNBC reported Friday (Jan. 5).
Starting Monday (Jan. 8), users of these exchanges will be required to complete a declaration about their investor profile and respond to a questionnaire related to financial services and regulations, according to the report. The declaration will ask users to identify themselves as either high net worth individuals or restricted investors, based on specific criteria.
Failure to complete these tasks successfully will result in the user being prevented from trading with their crypto account, the report said.
The introduction of these measures is a direct result of the Financial Services and Markets Act in the U.K., which now covers firms that offer cryptocurrencies and stablecoins under the same rules as traditional financial services, per the report.
To promote responsible trading and protect investors, crypto firms must be authorized or registered with the Financial Conduct Authority (FCA) to promote cryptoassets to retail customers, according to the report.
Coinbase, Crypto.com and Gemini have expressed their commitment to meeting U.K. investor protection standards and ensuring that customers understand the risks involved in investing in cryptocurrencies, the report said. They are actively working with local regulators to provide the necessary knowledge for users to make informed investment decisions.
However, the new financial advertising regulations have presented challenges for some crypto firms operating in the U.K., per the report. Some companies have suspended their services in the country, while others have halted certain crypto investments for U.K. clients. Binance, for instance, attempted to get its marketing authorized in the U.K. but was blocked by the FCA.
The British government has sought to balance the need to regulate the crypto sector with its efforts to establish the country as a global crypto hub.
The FCA has said that crypto assets remain high risk and has warned consumers that they are unlikely to be compensated by the government if they lose their funds.