Bybit, one of the world’s largest crypto exchange operators, expects to pull out of the United Kingdom ahead of new marketing rules that are set to go live in the coming weeks
“We do see regulation becoming more strict. Most likely, we’ll have to retreat in many countries. I think the UK — we’ll have to exit very soon. We recently exited France,” Ben Zhou, co-founder and CEO of Bybit, explained.
The Financial Conduct Authority will, on Oct. 8, enforce new rules — which include a cooling-off period for first-time investors — that it hopes will make the marketing of crypto products more transparent and more accurate.
Zhou said the new rules will change the way solicitation works. Although crypto derivative products have been banned in the UK since 2021, some exchanges have nonetheless been able to serve UK customers via reverse solicitation. That could all change on Oct. 8.
“FCA has explicitly contacted all the major players — us, OKX, Binance, everyone — and asked what our plan is to deal with this new law. And the new law is that if you use English as a language, they will see you as trying to solicit their users, so you cannot claim that you are in reverse solicitation,” Zhou said. “Everyone is in trouble. So everyone is thinking of plans for how to deal with this new law.”
For Bybit, the most likely consequence is that the exchange simply cuts ties with the UK altogether, Zhou added.
A wide-ranging regime
George Morris, a partner at Simmons & Simmons, said the promotions regime has been in force for securities firms for decades — but is now expanding to encapsulate crypto firms.
“The rules are extremely complicated and they’re quite wide-ranging,” said Morris, adding that even having a website that’s accessible by UK customers could, from Oct. 8, be construed as a promotion. “It’s not just UK firms that are subject to these rules — anyone with a website that can be accessed in the UK is subject to these requirements.”
Founded in 2018 as a derivatives-focused exchange, Bybit has, in recent years, branched out into a range of other products, including spot trading. But its roots in derivatives are still strong. The company today boasts around a 23% share of open interest across bitcoin futures, according to The Block Research’s data.
© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.