By George Ward
Due to undue regulatory scrutiny, crypto exchange giant Bybit recently debunked reports about its planned exit from the United Kingdom. The announcement came ahead of the UK’s proposed financial legislation scheduled to become effective by October 2023.
Bybit Reiterates UK Stay
Earlier, there were reports from several media outlets about the proposed plan by Bybit, the Dubai-based crypto exchange, to withdraw its services from the United Kingdom. According to reports, the move was due to the country’s new but stringent marketing rules for crypto firms operating in the UK.
However, Bybit stated on its official X handle that it remains committed to serving the UK market. According to the statement, Bybit is committed to the UK market, and the firm is working closely with the Financial Conduct Authority (FCA) to ensure that it complies with all applicable guidelines.
Along with the new security measures announced today, the exchange assured users its willingness to collaborate with UK regulators to ensure compliance with the latest financial promotion rules. These rules are intended to protect consumers from deceptive and fraudulent financial promotions.
Ben Zhou, co-founder and CEO of Bybit, also reaffirmed the exchange’s commitment to regulatory compliance. He added that negotiations with UK authorities on the “best solution” for all parties are ongoing.
This is a significant development because it shows that the exchange is taking the situation seriously and making efforts to find an acceptable solution for both parties and continue its operations in the UK. Notably, regulatory scrutiny made Bybit withdraw its services from Canada in May 2023.
According to the exchange’s announcement, ensuring regulatory compliance is critical for business operations in any country. Bybit faces similar challenges in the United Kingdom, where the FCA has taken a more aggressive stance against crypto exchanges.
If the company cannot agree with the regulator, it may also be forced to withdraw its services from the UK. However, observers noted that it is too early to predict what Bybit will do since the exchange is negotiating with the FCA, and a solution may be found.
The Proposed Financial Promotion Regulations
The FCA initially introduced the new financial marketing rules for crypto firms that want to offer their services to UK consumers in June 2023. According to the regulator, these rules were to ensure that all UK customers knew the risks associated with crypto investments.
In addition, the new rules require crypto firms to clearly state that such investments are high-risk and that investors may lose their entire investment. Crypto exchanges are also mandated to display risk warnings prominently on all their marketing materials.
Furthermore, they must avoid making exaggerated or misleading claims about the benefits of crypto investments. More importantly, their marketing should target sophisticated investors who can afford to lose their investment money.
Furthermore, the FCA prohibited crypto firms from providing specific incentives, like referral bonuses, to encourage people to invest in virtual currencies. Meanwhile, analysts note that the new rules are essential to protecting UK consumers from the risks associated with crypto investments.
Recall that in July, the UK regulatory body penned a memo addressing all crypto entities regarding how they promote their businesses. In anticipation of the upcoming regulatory framework, this letter outlined the several pathways the FCA will allow for promoting digital asset services and investments.
The regulator noted that it is critical for crypto exchanges to mark October 8, 2023, on their calendars because this is when the new rules will go into effect. Some provisions in these regulations are particularly noteworthy.
One such provision is the discontinuation of the once-attractive “refer a friend” bonuses. It is an example of a change in crypto promotional strategies allowed by the FCA.
The number of crypto firms that will leave the UK is uncertain once this new rule becomes effective.