The UK’s Financial Conduct Authority (FCA) is implementing strict restrictions aimed at cryptocurrency firms in a daring step that will change the face of the cryptocurrency industry. Delphi Labs’ General Counsel Gabriel Shapiro has issued a warning and painted a difficult picture of the industry’s road toward compliance.
Shapiro took to X (formerly Twitter) to share his insights, stating, “Strict compliance may be feasible only for centralized exchanges and a select few established DeFi projects.” However, he emphasized that even these giants might struggle to meet the demanding requirements within the allotted time frame.
But the hurdles don’t end there. Shapiro shed light on the financial burden these regulations could bring, estimating that each project may need a hefty minimum of $500,000 for legal counsel and development. To cover these costs, companies might be forced to reshuffle their financial decks, impacting other critical areas.
Despite the good intentions of these regulations to protect cryptocurrency investors, Shapiro argues that they don’t quite align with the industry’s peer-to-peer nature. “Many participants in the industry are not intermediaries or custodians,” he noted, underscoring the inherent clash between the laws and the crypto world’s decentralized essence.
The FCA’s new financial promotions regime, slated to take effect in October, is set to turn the marketing of cryptocurrency assets in the UK on its head. These revamped rules place tight restrictions on how crypto firms can promote their services to UK residents. Among the notable consequences is the clampdown on crypto referral programs and a host of other limitations.
In response to these new regulations, crypto giants like Luno and PayPal have been compelled to reconsider their strategies within the UK market. The impending legislation has forced both companies to announce restrictions on some of their services in the jurisdiction starting next month.