CEX.IO becomes latest crypto firm to resume UK operations after meeting FCA guidelines
Quick Take
- Crypto exchange CEX.IO has resumed operations in the UK, with its registration process now meeting the financial regulator’s guidelines.
- CEX.IO joins Nexo in collaborating with FCA-authorized and regulated financial promotion approver Gateway 21 to facilitate the return.
Centralized crypto exchange CEX.IO officially resumed UK operations on Thursday morning, with its registration process now meeting the compliance requirements of the country’s financial regulator, The Financial Conduct Authority.
CEX.IO had voluntarily suspended its services in the country following the FCA’s implementation of new crypto asset financial promotion regulations in October 2023.
The UK was one of CEX.IO’s primary markets, with local users accounting for some 69% of its total customers across the European Economic Area prior to the suspension, and transaction volumes growing 26.9% quarter-over-quarter, according to a statement shared with The Block.
The crypto exchange, which claims to have more than 15 million users worldwide, said it hopes to re-establish the UK as one of its target markets for new and existing customers. Currently, 190 digital assets are available in the UK, the firm said.
“We operate strictly within current regulations and hold 40 licenses and registrations worldwide. Additionally, we employ advanced client security measures. 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 still in the process of obtaining an AML registration from the FCA. However, it was able to return to the UK market through a collaboration with Gateway 21 — an FCA-authorized and regulated financial promotion approver — with all CEX.IO services currently provided from Lithuania. Such providers are increasingly being used by crypto firms to ensure UK compliance, with crypto lender Nexo also announcing its resumption of UK client registrations last week following a similar deal with Gateway 21.
Required changes for crypto firms in the country include cool-off periods and specialized risk warnings for UK clients. Users also need to complete investor categorization questionnaires and appropriateness assessments — in what has become a standard practice for crypto firms serving UK clients.
CEX.IO is an interesting player in the crypto space, having started its journey as the GHash.IO mining pool in 2013. GHash.IO connected users collectively mined over 583,000 bitcoins before the pool ceased operations after nearly reaching 51% of the Bitcoin hash rate. This led to concerns in the community about the potential for a "51% attack," which could theoretically allow the pool to double-spend coins or manipulate transactions. In response, some miners chose to leave the pool to reduce its dominance.
The UK's crypto promotions rules
The FCA's new regime for crypto asset financial promotions took effect on Oct. 8, 2023, with the regulator subsequently issuing 450 alerts against illegal crypto promotions that year alone and warning that even crypto memes posted on social media could breach the rules. Crypto exchanges like Coinbase and Binance went as far as removing news feeds for UK residents to avoid being caught foul of the new regulations.
The regulator said at the time that unregistered crypto asset firms who fail to comply with the new financial promotions guidelines are likely to breach section 21 of the UK's Financial Services and Markets Act 2000. This would be a criminal offense, punishable by up to two years imprisonment, an unlimited fine, or both.
The new rules were rolled out in the hope they would make the marketing of crypto products more transparent and accurate. However, several firms, including payment giant PayPal and fintech app Revolut, found them challenging, with crypto exchange Bybit exiting the UK market altogether.
Meanwhile, others such as Coinbase, OKX and Binance also turned to third parties for compliance, with entities already registered or authorized by the FCA able to approve financial promotions on behalf of unregulated firms.
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