The realm of cryptocurrencies is in a perpetual state of flux, with regulations often serving as the primary catalyst for change. The United Kingdom, in particular, has recently introduced stringent regulations that are reshaping the landscape for the promotion of digital currencies. This, in turn, has prompted some of the world’s largest cryptocurrency exchanges to re-evaluate their strategies.
Notably, the renowned crypto exchange, Bybit, made the decision to exit the UK market in response to the far-reaching impacts of these new marketing regulations. However, in a fascinating turn of events, several of Bybit’s international competitors have opted for a different path. They have chosen to collaborate with local partners in order to align with the evolving regulatory requirements.
Coinbase and OKX, two prominent players in the cryptocurrency space, have joined forces with the cryptocurrency startup Archax. Their primary objective is to obtain the necessary approvals for financial promotions, a prerequisite under the new UK regulations. Meanwhile, Binance, another major crypto exchange, has not remained idle. In a blog post dated October 8, they unveiled a strategic partnership with Rebuilding Society, a regulated peer-to-peer lending platform that has been providing loans since its inception in 2013, totalling an impressive $35 million ($23.6 million).
These collaborative endeavours have not been undertaken in vain. These strategic partnerships are anticipated to enable these exchanges to continue serving their customer base in the UK, despite the challenges posed by the new marketing rules implemented by the Financial Conduct Authority (FCA). These rules include provisions such as a cooling-off period for new investors and have only recently taken effect.
George Morris, a partner at the prestigious law firm Simmons & Simmons, shed light on the significance of these partnerships. He stated, “When approvers enter into an agreement with the exchange, they approve the promotions and, in fact, assume responsibility for those promotions. It is a mutually beneficial situation.”
Nevertheless, not all cryptocurrency exchanges are experiencing a seamless transition. The FCA has issued a warning list, cautioning against exchanges like HTX and KuCoin, which are operating in the UK without the requisite permissions. The message is crystal clear: working in tandem with local partners and adapting to the new regulatory landscape is imperative for exchanges aspiring to continue their operations within the UK market.