CEX.IO has resumed UK operations after complying with the FCA’s new crypto asset promotion regulations, which led to a voluntary suspension last year.
On Thursday morning, CEX.IO, a centralized crypto exchange, recommenced operations in the United Kingdom. The company’s registration process now complies with the Financial Conduct Authority, the country’s financial regulator.
Following the FCA’s implementation of new crypto asset financial promotion regulations in October 2023, CEX.IO voluntarily suspended its services in the country.
According to a statement provided to The Block, the UK was one of CEX.IO’s primary markets, with local users accounting for approximately 69% of its total customers across the European Economic Area before the suspension. Additionally, transaction volumes increased by 26.9% quarter over quarter.
The cryptocurrency exchange, which states that it has over 15 million users worldwide, expressed its intention to reestablish the United Kingdom as one of its target markets for both new and existing consumers. According to the organization, there are currently 190 digital assets accessible in the United Kingdom.
“We operate strictly within current regulations and hold 40 licenses and registrations worldwide. Additionally, we employ advanced client security measures. As a result, in our 11-year history, the company has not been involved in any security incidents or legal cases with regulators. Responsibility to both legal standards and the users who entrust us with their funds has always been a top priority for CEX.IO, even if it means sacrificing business growth,” CEX.IO UK Managing Director Rich Evans said.
CEX.IO is currently in the process of obtaining an AML registration from the FCA. Nevertheless, it was able to reenter the UK market by partnering with Gateway 21, a financial promotion approver that is FCA-authorized and regulated.
All CEX.IO services are currently provided from Lithuania. Crypto firms are increasingly employing these providers to guarantee conformance with UK regulations. Nexo, a crypto lender, also announced the resumption of UK client registrations last week, following a comparable agreement with Gateway 21.
Cool-off periods and specialized risk cautions for UK clients are among the necessary modifications for crypto firms in the country. Additionally, users must complete investor categorization questionnaires and appropriateness assessments, which have become a standard practice for crypto firms that serve clients in the United Kingdom.
CEX.IO, which originated as the GHash.IO mining pool in 2013, is a fascinating entity in the cryptocurrency sector. Before the pool discontinued operations, users connected to GHash.IO collectively mined more than 583,000 bitcoins, nearly achieving 51% of the Bitcoin hash rate.
This resulted in community apprehension regarding the possibility of a “51% attack,” which could conceivably enable the pool to manipulate transactions or double-spend coins. In order to mitigate its dominance, a number of miners elected to withdraw from the pool.
Regulations Regarding Cryptocurrency Promotions in the United Kingdom
The FCA’s new regime for financial promotions of crypto assets was implemented on October 8, 2023. Subsequently, the regulator issued 450 alerts against unlawful crypto promotions that year and cautioned that even crypto memes posted on social media platforms could violate the regulations.
In order to circumvent the new regulations, cryptocurrency exchanges such as Binance and Coinbase eliminated news feeds for UK residents.
The regulator stated at the time that unregistered crypto asset firms that do not adhere to the new financial promotions guidelines are likely to violate section 21 of the UK’s Financial Services and Markets Act 2000. This would constitute a criminal offense, which could result in an unlimited fine, up to two years of imprisonment, or both.
The new regulations were implemented with the intention of enhancing the transparency and precision of the marketing of crypto products. Nevertheless, a number of companies, such as the fintech app Revolut and the payment behemoth PayPal, encountered difficulties in this regard. As a result, the crypto exchange Bybit withdrew from the UK market.
In the interim, Coinbase, OKX, and Binance also sought third-party compliance, with entities that were already registered or authorized by the FCA being able to sanction financial promotions on behalf of unregulated firms.
