Crypto industry followers with an eye on the UK may recall the positive messaging coming from British authorities throughout 2023. Speaking at the London launch event of venture capital firm Andreessen Horowitz, which has invested heavily in cryptocurrencies, Chancellor Rishi Sunak said his intention was to “make the UK the Web3 capital of the world.”
This comes roughly a year after the British government (while Sunak was still Chancellor of the Exchequer) announced plans to “position the UK as a global hub for cryptocurrency technology and investment.”
Additionally, the Bank of England recently published a lengthy regulatory proposal aimed at safely enabling a “systematic payments system using stablecoins and associated service providers,” stating that “Stablecoins are likely to be used by many people in the UK for everyday payments. Regulation lays the foundation for safe and sustainable innovation in money and payments.”
Total stablecoin supply
Two very different stories
With leading politicians on board and the Bank of England recognizing the disruptive changes enabled by distributed ledgers, directional momentum was building. Additionally, these developments increased the likelihood that the UK would be able to compete effectively with the EU and its continent-wide new regulatory framework for the cryptocurrency industry, MiCA. But while all this was unfolding, some actual cryptocurrency users in the UK may have been experiencing a different story.
Brits who deal with cryptocurrencies through centralized platforms and for whom crypto-to-fiat on/off-ramps are crucial have had a year of limited options, with major players like PayPal, Luno, Bybit and KuCoin suspending some of their services. And now, following this trend, news has come that digital bank Revolut is suspending some of its crypto services in the UK.
What happened at Revolut?
According to an email sent by Revolut to its business customers, the popular banking platform will temporarily suspend cryptocurrency purchases by UK-based Revolut business customers, with the change taking effect from 3 January 2024. Holding and selling cryptocurrency is still permitted and the change does not affect Revolut retail customers, who can buy, sell and hold as normal.
As for why this is necessary, Revolut says it is due to new regulatory requirements for cryptocurrency investments from the Financial Conduct Authority (FCA) that come into effect on January 8. In response, Revolut said in an email to business customers:
“We need to adapt our current cryptocurrency services for businesses to ensure that all new requirements are met.”
The FCA's cryptocurrency financial promotion rules were published in June this year, and from October onwards, all businesses promoting cryptocurrencies to retail consumers will be required to register with the FCA. Meanwhile, the FCA's outline of the new cryptocurrency rules published in November states:
“A core requirement of the Financial Promotions Regulation is that financial promotions must be fair, clear and not misleading.”
From there, the FCA's guidelines are detailed and far-reaching, covering stablecoins and yield-producing assets as well, which could pose a major obstacle for crypto companies looking to do business in the UK. Move fast and break things Rather than providing clearly verifiable proof of functionality before launch, they emphasize the technology mantra and turn it up to eleven.
It stands to reason, therefore, that firms offering investments in crypto assets may need more time to ensure they are fully compliant with the FCA's new regulatory requirements, and the question now is where will the UK crypto industry be in a few months' time?
Is it a temporary glitch?
Notably, Revolut emphasized the temporary nature of its crypto trading halt, calling it only a “pause” and saying it was working to ensure regulatory compliance. Moreover, the FCA is not simply lumping cryptocurrencies into existing rules that may be incompatible with new asset classes. To see the legal battles that the latter approach would trigger, look across the Atlantic to the ongoing clash between the SEC and US crypto companies that are arguing that the SEC can incorporate cryptocurrencies into traditional securities law.
In contrast, the FCA, like the EU's MiCA mentioned above, is developing new guidelines and seems willing to consider cryptocurrencies on its own terms. This shows an acceptance of the cryptocurrency industry and its idiosyncrasies, but this is coupled with a recognition that applying some kind of regulation is becoming a priority.
The current situation, which has seen a growing number of firms being forced to suspend some of their crypto services in the UK, suggests that the FCA’s rules are not too strict or essentially unworkable, but rather that the new guidelines simply provide too short a deadline for ensuring their implementation. compliance .
And 2024 looks like a potentially big year. Blockchain The situation in the UK remains fluid, and cryptocurrency operators will be working to ensure that the bumps in the road turn into smoother highways.
Crypto industry followers with an eye on the UK may recall the positive messaging coming from British authorities throughout 2023. Speaking at the London launch event of venture capital firm Andreessen Horowitz, which has invested heavily in cryptocurrencies, Chancellor Rishi Sunak said his intention was to “make the UK the Web3 capital of the world.”
This comes roughly a year after the British government (while Sunak was still Chancellor of the Exchequer) announced plans to “position the UK as a global hub for cryptocurrency technology and investment.”
Additionally, the Bank of England recently published a lengthy regulatory proposal aimed at safely enabling a “systematic payments system using stablecoins and associated service providers,” stating that “Stablecoins are likely to be used by many people in the UK for everyday payments. Regulation lays the foundation for safe and sustainable innovation in money and payments.”
Total stablecoin supply
Two very different stories
With leading politicians on board and the Bank of England recognizing the disruptive changes enabled by distributed ledgers, directional momentum was building. Additionally, these developments increased the likelihood that the UK would be able to compete effectively with the EU and its continent-wide new regulatory framework for the cryptocurrency industry, MiCA. But while all this was unfolding, some actual cryptocurrency users in the UK may have been experiencing a different story.
Brits who deal with cryptocurrencies through centralized platforms and for whom crypto-to-fiat on/off-ramps are crucial have had a year of limited options, with major players like PayPal, Luno, Bybit and KuCoin suspending some of their services. And now, following this trend, news has come that digital bank Revolut is suspending some of its crypto services in the UK.
What happened at Revolut?
According to an email sent by Revolut to its business customers, the popular banking platform will temporarily suspend cryptocurrency purchases by UK-based Revolut business customers, with the change taking effect from 3 January 2024. Holding and selling cryptocurrency is still permitted and the change does not affect Revolut retail customers, who can buy, sell and hold as normal.
As for why this is necessary, Revolut says it is due to new regulatory requirements for cryptocurrency investments from the Financial Conduct Authority (FCA) that come into effect on January 8. In response, Revolut said in an email to business customers:
“We need to adapt our current cryptocurrency services for businesses to meet all the new requirements.”
The FCA's cryptocurrency financial promotion rules were published in June this year, and from October onwards, all businesses promoting cryptocurrencies to retail consumers will be required to register with the FCA. Meanwhile, the FCA's outline of the new cryptocurrency rules published in November states:
“A core requirement of the Financial Promotions Regulation is that financial promotions must be fair, clear and not misleading.”
From there, the FCA's guidelines are detailed and far-reaching, covering stablecoins and yield-producing assets as well, which could pose a major obstacle for crypto companies looking to do business in the UK. Move fast and break things Rather than providing clearly verifiable proof of functionality before launch, they emphasize the technology mantra and turn it up to eleven.
It stands to reason, therefore, that firms offering investments in crypto assets may need more time to ensure they are fully compliant with the FCA's new regulatory requirements, and the question now is where will the UK crypto industry be in a few months' time?
Is it a temporary glitch?
Notably, Revolut emphasized the temporary nature of its crypto trading halt, calling it only a “pause” and saying it was working to ensure regulatory compliance. Moreover, the FCA is not simply lumping cryptocurrencies into existing rules that may be incompatible with new asset classes. To see the legal battles that the latter approach would trigger, look across the Atlantic to the ongoing clash between the SEC and US crypto companies that are arguing that the SEC can incorporate cryptocurrencies into traditional securities law.
In contrast, the FCA, like the aforementioned EU's MiCA, is developing new guidelines and seems willing to consider cryptocurrencies on its own terms. This shows an acceptance of the cryptocurrency industry and its idiosyncrasies, but this is coupled with a recognition that applying some kind of regulation is becoming a priority.
The current situation, which has seen a growing number of firms being forced to suspend some of their crypto services in the UK, suggests that the FCA’s rules are not too strict or essentially unworkable, but rather that the new guidelines simply provide too short a deadline for ensuring their implementation. compliance .
2024 is likely going to be a big year. Blockchain The situation in the UK remains fluid, and cryptocurrency operators will be working to ensure that the bumps in the road turn into smoother highways.
