UK consumers are no longer financially protected when dealing with crypto exchanges Houbi and KuCoin after they were among 146 new names added to the Financial Conduct Authority’s (FCA) unauthorized firms ‘warning list.’
The list, which the FCA says shows “details of unauthorized firms and individuals that we’re aware of, that aren’t allowed to operate in the UK,” was updated to take into account new regulations that came into effect on Sunday.
Under the new rules, firms wanting to promote crypto assets in the UK, regardless of the country they’re headquartered in, must be authorized or registered with the FCA. New promotions must be “clear, fair and not misleading, labeled with prominent risk warnings, and must not inappropriately incentivize people to invest.”
According to the FCA, customers dealing with any so-called ‘unauthorized firms’ won’t be covered by the UK’s financial ombudsman or Financial Services Compensation Scheme.
A Huobi spokesperson said the crypto firm “does not operate or market its services or products in the UK,” while KuCoin claimed that it’s committed to adjusting its “products and services accordingly to ensure compliance with relevant laws and regulations in each country to the extent possible.”
Cooperative responses may work for flagged firms as the FCA says it’s taking a “proportionate approach” with firms that are looking to achieve compliance and that are engaging with the FCA “in good faith.”
Guilty firms could incur an unlimited fine
The FCA previously warned firms of the upcoming changes on Sept 22. In a letter, it stressed all the ways in which firms must comply while also taking aim at those which failed to respond to an FCA survey on time.
Non-compliant firms will be placed on the warning list, illicit crypto promotions may be removed, while more serious consequences could include up to two years in prison, an unlimited fine, or both.