Dubai-headquartered cryptocurrency trading platform Bybit on Friday announced that it will wind up operations in the United Kingdom in the wake of new cryptocurrency marketing rules set to be enforced by the country’s financial regulator, the Financial Conduct Authority (FCA), on October 8, 2023.
“In light of the UK Financial Conduct Authority’s introduction of new rules regarding marketing and communications by crypto businesses as outlined in the June 2023 Policy Statement (PS23/6) entitled ‘Financial Promotion Rules for Crypto assets,’ Bybit has made a choice to embrace the regulation proactively and pause our services in this market,” a statement issued by the company read.
Bybit will not allow new user registrations on its platform, starting October 1, 2023. The crypto exchange will also reportedly suspend new deposits, contract creations, and modifications to existing positions for its current users in the U.K. from October 8 onwards. Bybit said it decided to halt its services to “focus its efforts and resources … to best meet the regulations outlined by the UK authorities.”
The statement comes against the backdrop of a final warning by the UK’s financial regulator, which trained its guns on crypto firms for their “lack of engagement” with the new crypto marketing oversight rules. The FCA said it was especially concerned about foreign crypto asset firms with UK customers.
It is noteworthy that earlier this year, the FCA made clear its intentions to introduce new restrictions on financial promotions. In June, the U.K. Parliament passed the UK Financial Services and Markets Act 2023 (the “2023 Act), bringing crypto-assets under the purview of the U.K.’s broader financial regulatory regime.
Once the new rules come into effect on October 8, 2023, it will be mandatory for businesses to offer a 24-hour cooling-off period for first-time crypto investors in the UK, during which they cannot view financial promotions. Furthermore, companies will be required to include clear risk warnings in their promotions, emphasizing the high-risk nature of crypto investments.
The goal is to provide “clear, fair, and not misleading” marketing regimes, protect consumers from scams and stamp out illegal advertising practices rampant in the crypto industry. Additionally, a ban will be imposed on any communication that invites or induces engagement in investment activity unless it’s conducted or approved by a regulated entity or an exemption is applicable. Those found guilty of non-compliance will be subject to hefty fines and could even land in jail.
Unlike the US government, which has been forcing crypto companies to register their tokens as securities, the UK’s new rules are aimed at creating a disclosure regime which will regulate the conduct of any individual who promotes cryptocurrencies in the country, similar to how the U.K. regulates the promotion of securities.
Amid an increase in promotional memes, the FCA introduced strict regulations for crypto ads in July in an attempt to protect consumers from scams and excessively risky investments. Prior to that, the FCA and Advertising Standards Authority launched a joint campaign, warning “finfluencers” against promoting get-rich-quick schemes and other risky investments.
A surge in the number of finance-oriented influencers marketing financial products without sufficient knowledge, especially targeting a younger audience, has raised concerns. The UK is not the only country clamping down on crypto ads. In the U.S., the New York Department of Financial Services (NYDFS), has released guidelines for crypto ads and stablecoins. French lawmakers are also mulling a ban over the promotion of crypto assets.
