UK Cryptocurrency Exchanges Adapt to Enhanced Regulatory Standards

blockchain.news:

The United Kingdom's cryptocurrency landscape is undergoing significant changes as it aligns with the Financial Services and Markets Act. This pivotal development, marking a substantial shift in regulatory approach, aims to apply rigorous standards, akin to those in traditional financial services, to firms operating with cryptocurrencies and stablecoins.

Cryptocurrency exchanges like Coinbase, Crypto.com, and Gemini have already initiated measures in response to these new regulations. They have introduced risk assessments and finance tests for users in the UK, which include a declaration about their investor profile and a related questionnaire. These steps are critical for compliance with the requirements that demand crypto companies to inform users about the risks associated with trading cryptocurrencies and advertise their services responsibly. Notably, the failure to complete these measures will prevent users from trading with their crypto accounts​​.

The broader framework for these regulatory changes is set out by the UK Government, intending to balance innovation with financial stability and clear regulatory standards. New specific regulated activities for cryptoassets will be created, paralleling those in traditional financial markets. Consequently, crypto native firms, whose primary business revolves around cryptoassets, will need full authorization and supervision by the Financial Conduct Authority (FCA). Traditional finance firms will also have the opportunity to expand their permissions to include cryptoasset activities​​.

In addition to the direct impact on firms operating within the UK, these regulations extend their reach to offshore firms providing services to UK clients. These firms will need