New UK crypto laws pose stiff challenge for most firms, cautions Delphi Labs counsel News โธ UK โธ Regulation
New UK crypto laws pose stiff challenge for most firms, cautions Delphi Labs counsel
The U.K.'s FCA implemented a revised financial promotions regime set to take effect in October.
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Updated: Sep. 12, 2023 at 12:44 pm UTC
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Delphi Labs general counsel Gabriel Shapiro warned that most crypto firms will struggle to comply with the new financial promotions regulations by the U.K. Financial Conduct Authority (FCA).
In a Sept. 11 post on X (formerly Twitter), Shapiro noted that strict compliance with the regulations may be feasible only for centralized exchanges and a select few established DeFi projects. However, he emphasized that even these entities could face challenges meeting the compliance requirements due to time constraints.
Shapiro further highlighted the financial challenges that might come with compliance. According to him, each project could require a minimum of $500,000 forย legal counsel and development. He pointed out that covering these costs could necessitate reallocating funds from other areas.
While the crypto attorney conceded that the regulations would help to protect people “investing in coins,” he pointed out that the laws were incompatible with the industry because “most of the tech is peer to peer” and “many participants in the industry are not intermediaries or custodians.”
The new regulation
The U.K.’s FCA implemented a revised financial promotions regime set to take effect in October, impacting the marketing of cryptocurrency assets. These updated regulations impose stringent guidelines on how crypto firms can promote their services to residents of the United Kingdom. Notably, one consequence of these regulations is prohibiting crypto referral programs, among other restrictions.
Meanwhile, the law established various legitimate avenues for companies to market crypto assets to consumers in the United Kingdom. These pathways encompass communication by an authorized individual, communication by an unauthorized individual with approval from an authorized person, or contact by a company registered under the FCA Money Laundering Regulations (MLRs).
These new regulations have forced several crypto firms, including Luno and PayPal, to have a changed approach towards their services in the country. Due to the upcoming legislation, the two firms would restrict some of their services within the jurisdiction starting in October.
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