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UK inches closer to a new crypto regulatory regime

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The UK administration will soon disclose its plan on regulating the cryptocurrency market, primarily focusing on stablecoins, according to industry sources close to the matter. More details of the plan will be revealed in due course of time, it added.

Sources interviewed by CNBC sought to dispel fear by saying that regulation favorable to the industry is being finalized which would provide the much-needed legal clarity for the sector.

They also told that Treasury officials have shown readiness to understand the intricacies of the crypto market, stablecoins, and other digital assets that derive their value from existing currencies like the U.S. dollar.

Further, the British Minister of Finance Rishi Sunak would be making an announcement within a few weeks about a new regulatory regime for crypto. Sources told CNBC requesting anonymity as the information is still under wrap.

Britain's Chancellor of the Exchequer Rishi Sunak leaves the 11 Downing Street, in London, on March 23, 2022.

As per the report, the department is in touch with a number of firms and trade groups including the Winklevoss brothers’ led crypto exchange Gemini. As a matter of fact, Gemini has its own stablecoin called the Gemini Dollar, which is pegged to the U.S. currency.

Despite lawmakers’ optimistic outlook, UK regulators have their own share of concerns with regard to crypto.

UK’s top bank calls for limiting risks arising from crypto

Last week, the UK’s central bank – The Bank of England [BoE] urged policymakers to expand regulatory frameworks to limit the risks posed by crypto to financial stability. BoE’s Deputy Governor Sam Woods wrote a letter to several bank CEOs saying there has been “increased interest” from banks and investment firms in “entering various crypto markets.”

Apart from that, there have also been concerns about digital assets being used to evade financial sanctions imposed on Russia since its invasion of Ukraine.

While digital assets are unlikely to provide a feasible way to circumvent sanctions at scale currently, the possibility of such behavior underscores the importance of ensuring innovation in crypto assets is accompanied by effective public policy frameworks to maintain broader trust and integrity in the financial system,” the BoE’s Financial Policy Committee said in a statement released on 24th March.

UK watchdogs tighten noose on crypto ads

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Over 50 companies that have marketed cryptocurrency services in the United Kingdom (UK) have received an enforcement notice from the Advertising Standards Authority (ASA), instructing them to assess their adverts to ensure they comply with new instructions.

The companies mentioned are the ones that appear to have pushed cryptocurrency ahead of a planned crackdown in the country on deceptive and irresponsible crypto advertisements, according to reports.

The notice, according to the Advertising Standards Authority, is intended to act as a caution to firms to examine and tidy up their adverts over the following two months, after which more stringent measures to punish rule-breakers would be implemented.

Crypto advertisements, that have risen as digital assets along with gaining widespread appeal, have been targeted by regulators around the world. Earlier this year, governments and watchdogs in the UK, Singapore, and Spain pledged to stiffen regulations on crypto advertisements. These rigorous guidelines also limit such promotions to just rich investors, though the United Kingdom has yet to establish a deadline for enacting that reform into law.

Guidelines of UK’s advertisement enforcement notice

All promotions should clearly and prominently state that cryptoassets are unregulated in the United Kingdom, that any profits may be subject to Capital Gains Tax, and that the value of crypto investments can go down as well as up, according to the ASA’s enforcement notice, which was issued on Tuesday. Advertisements in newspapers and magazines, on television, in emails, on outdoor posters, in boosted social media postings, and through paid agreements with influencers are all inclusive of this.

The ASA said that all commercials airing between now and May 2 will be checked for compliance, with “targeted enforcement action” taken if problems remain after that date. Furthermore, repeat offenders will be reported to the Financial Conduct Authority as well as Trading Standards, which has the authority to prosecute, penalise, and eventually stop businesses from trading.

The ASA refused to name any of the companies that got the enforcement notice but alluded to recent ASA judgments against crypto ad companies in the United Kingdom. Coinbase Europe Ltd, Arsenal Football Club, eToro’s UK subsidiary, and Floki Ltd., which launched adverts in favour of the parody cryptocurrency Floki Inu, are among the companies involved.

Floki Inu Ads Banned by UK Regulators

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According to an inquiry by the advertising authorities, advertisements for the cryptocurrency Floki Inu, which were splattered over London’s public transportation network last autumn, violated UK advertising regulations.

The Advertising Standards Authority stated that the commercials, which carried the phrase “Missed Doge?” violated the Advertising Standards Act. “Get Floki” and a cartoon dog mascot “exploited customers’ anxieties of losing out… trivialized cryptocurrency investing and took advantage of consumers’ inexperience or naivety,” according to the report.

The Floki Inu advertisements campaign, named after Elon Musk’s pet dog, became a flashpoint for opposition to the broad promotion of crypto tokens and exchanges in the UK, with numerous London elected figures demanding adverts on public transportation to be prohibited.

UK says bye bye to Floki ads

Following an inquiry, the ASA came to the following conclusion. The usage of a cartoon dog wearing a Viking helmet, along with the tagline “Missed Doge.” ‘Get Floki’ played on people’s worries of missing out.

Furthermore, the advertising regulator found that “the commercial was reckless” and “took advantage of consumers’ inexperience or naivety.”

The ASA stated that it has instructed the developers of the Floki Inu cryptocurrency to “ensure that they did not recklessly abuse consumer’s fear of losing out and trivialize cryptocurrency investing.”

They must also “ensure that they did not take advantage of consumers’ lack of knowledge or skepticism by failing to make clear that CGT might be irresponsibly imposed on bitcoin gains.”

The ASA concluded that the advertisement must not reappear in the form it was complained about.

The advertising authorities also pointed out that the disclaimer at the bottom of the advertisement was modest compared to the wording “Missed Doge?” “Find Floki.”

“Despite the qualifying wording, the prevailing impression of the ad was the urgent need to acquire Floki, to avoid consumers losing out in the same manner they may have lost out with dogecoin,” the ASA said.

The Advertising Standards Authority in the United Kingdom has been clamping down on deceptive crypto advertisements. IN DECEMBER, the ASA banned seven crypto advertising, including those for Papa John’s Pizza, Coinbase, Kraken, Etoro, Luno, Coinburp, and Exmo.

In addition, the government of the United Kingdom said in January that it intends to enforce new regulations on cryptocurrency ads.

FLOKI falls under the purview of the U.K. Advertising Authority

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The Advertising Standards Authority (ASA) of the United Kingdom is cautiously looking into all crypto-based adverts, including Floki Inu. There have been various adverts reported on the public transports in London to which the Floki team has quickly responded. FLOKI determined this as merely an attack from the lawmakers.

The FLOKI token was reportedly inspired by the renowned dog coin Shiba Inu that has been trending for a while. The coin has a huge following on Twitter as well and has risen by more than 147% in October.

The officials of the coin have come ahead to clear out the air on the allegations. Floki Inu clearly stated:

“The FLOKI advertisements placed through Transport for London followed due process and were legally cleared before they went live.”

The London lawmakers seem to have an issue with the project, citing little knowledge of the creators.

Floki Inu responded to this by saying that their decision of not predominantly featuring team members on the website was made with an intention to clear that the coin is PEOPLE’s crypto and was rather a movement focused on them. 

The officials added that the attack by lawmakers against their ads is unwarranted. They believe that the pushback is certainly by a political party to attack crypto and people’s freedom of choice. They find it a clear attempt at censorship.

However, the lead developer of the coin Jackie Xu is pretty popular on social media and well regarded in the industry. He has also worked on the Vyper project alongside Ethereum creator Vitalik Buterin.”

Floki questions the actions of lawmakers

Floki added that crypto is not illegal in the U.K., and more than 2.3 million citizens hold some or other digital assets. The officials questioned the actions of lawmakers allowing nudity and other inappropriate adverts but being against crypto. They stated:

“Ads that make women feel shameful about their bodies, as well as ads about Viagra and junk food, are allowed to run freely on the Tube….” 

The crypto has been involved in charitable deeds for quite some time. It recently donated all the money raised in an NFT sale worth $1.4 million to charity. It is also working with Pencils to Promise to construct schools in different regions of the world, including Africa.

PayPal finally opens its crypto doors to all UK customers

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Prominent payments firm, PayPal entered the crypto-verse and changed the market forever. The emergence of the crypto industry was identified by this major platform and it made a timely move with its entrance into the market. With an intention of further sprucing up its crypto game, it decided to expand its digital asset services all across the globe.

Back in August, PayPal had announced its interest in venturing into the UK. While the payments firm already has a well-established base all around the world, it was just starting to incorporate crypto into its system. Today, the firm finally revealed that it had opened the doors to its crypto services to all eligible customers of the UK.

With this announcement, the payments giant noted that UK customers would be able to buy, sell as well as hold an array of cryptocurrencies. This service was originally expected to go live back in the last week of August itself.

PayPal takes its crypto business to the UK

UK users would be able to choose from a wide range of crypto assets that include, Bitcoin [BTC], Ethereum [ETH], Litecoin [LTC] as well as Bitcoin Cash [BCH]. While the platform currently offers only four crypto assets, the community was seen urging it to add a few more prominent ones like XRP.

In its initial announcement PayPal’s Vice President and General Manager, Blockchain, Crypto and Digital Currencies, Fernandez da Ponte, stated that the firm intends to closely work with regulators in the UK. He also added that the payments giant wanted to “meaningfully contribute to shaping the role digital currencies will play in the future of global finance and commerce.”

The payments facilitator took to Twitter to announce the commencement of this service. The tweet,

“We are delighted to share that all eligible customers in the UK can now buy, hold and sell #Cryptocurrencies #Bitcoin, #Ethereum, #BitcoinCash & #Litecoin from their PayPal account. Look out for it in the PayPal app.”

Taking its crypto business into the UK would be considered PayPal’s first international expansion after the United States. The fervor around crypto could certainly surge in the UK as a fully established brand like PayPal had entered the game.

UK authorities nab crypto worth $250 million part of a money laundering case

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The crypto industry isn’t new to scams and hacks. As the UK has been doubling down on regulations, particularly with regard to the crypto-verse, the police in the region took down a money-laundering operation. They went on to confiscate a large sum of money.

The crypto market has been linked to an array of illegal activities, from being a part of the dark web all the way to money laundering and funding terrorism. Even though crypto platforms across the industry have been setting up robust anti-money laundering procedures, certain things go unnoticed in the industry.

Law enforcement does not lag as they keep up and bring down any bad actors in the industry. Similarly, UK’s Metropolitan Police revealed that they had come into possession of about $250 million worth of cryptocurrency.

UK’s largest crypto seizure yet?

Towards the end of June 2021, UK’s Met arrested a 39-year-old as a potential suspect of a money laundering case. While she was released on bail, the Met captured a total of £114million around the same time. As the world assumed that the sum as mentioned earlier would be their largest seizure in crypto, the Met went on to secure another £180 million worth of cryptocurrency on 10 July.

Noting how criminals have been taking their crimes digital, Deputy Assistant Commissioner Graham McNulty suggested that cash still remains king in the criminal world. He also revealed that the law enforcement agency had managed to bag “highly trained officers” to probe this territory.

As the investigation persists, the Deputy Assistant Commissioner added,

“The detectives on this case have worked tirelessly and meticulously to trace millions of pounds worth of cryptocurrency suspected of being linked to criminality and now being laundered to hide the trail. Those linked to this money are clearly working hard to hide it. Our investigation will stop at nothing to disrupt the transfer and identify those involved.”

UK’s Binance users can now withdraw funds via Faster Payments

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Binance, the world’s largest cryptocurrency exchange, has been encountering some severe issues in the UK. With the country’s prominent financial regulator forcing the platform to suspend activities pertaining to derivatives as well as securities, Binance announced that its Faster Payments network was shut for maintenance around the same time.

The Financial Conduct Authority [FCA] took down the exchange and urged it to cease all regulated activities unless it garnered the approval of the FCA. The FCA announced that the reason behind the ordeal was related to the exchange not being registered with the regulator.

While Binance’s fallout with the regulator persists, the platform notified that Faster Payments was functioning again, and withdrawals were reactivated once again.

UK’s FCA urges Binance to make a statement

Last year, around the same time, the FCA issued a notice asking Binance to veer away from accepting or even promoting new applications for lending by retail customers through the operation of its electronic lending system.” This required Binance to put a hold on endorsements in the UK as it wasn’t registered with the FCA.

Shedding light on its status in the UK, the crypto exchange wrote on its website,

“Binance.com is a platform providing various products and services to global customers. Some of these products and services are regulated outside the UK, while others are not. Binance Markets Limited is a UK based company which has not yet carried on any business. BINANCE MARKETS LIMITED IS NOT PERMITTED TO UNDERTAKE ANY REGULATED ACTIVITIES IN THE UK.”

Binance seems to be drowning in troubled waters as the UK wasn’t the only region banning the platform. Towards the end of June 2021, the Japanese regulator, Financial Services Agency [FSA], called out Binance for functioning in the region without a license. While the exchange had previously assured that it would no longer serve the citizens of Japan, it continued to do so for quite a while. This enraged the regulators and forced them to issue a notice against the platform.

Coinfloor Called Out For Advertising Bitcoin Irresponsibly

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The crypto-verse has encountered multiple issues with regard to the advertising of digital assets. Coinfloor seems to be the latest platform swimming in troubled waters for its “irresponsible and misleading” Bitcoin advertisement.

An array of videos and advertisements surfing on social media with celebrities endorsing crypto were taken down in the past couple of years, as they were fake and scammy. While governments are still fighting against these ads, a prominent crypto platform, Coinfloor has been called out for putting out a “misleading” Bitcoin advertisement.

Coinfloor Drowns In Troubled Waters

A recent report announced that the United Kingdom Advertising Standards Authority had charged Coinfloor for advertising Bitcoin in an “irresponsible and misleading” manner in a local news portal. The ad, with the picture of a 63 old woman suggested that converting her pension into Bitcoin was a wiser option as opposed to saving the money in the bank.

The advertisement read,

“More and more people are waking up to the savings power of Bitcoin… Today there is no point keeping it in the bank — the interest rates are insulting. […] That is why when I received my pension, I put a third of it into gold, a third of it into silver and the remainder into Bitcoin.”

The ad further goes on to appreciate the “Coinfloor’s Autobuy service” which reportedly eases the access, buying as well as holding of the king coin. However, the ad reportedly fails to mention the risks associated with investing in crypto and the volatility accept as well.

Furthermore, the United Kingdom Advertising Standards Authority pointed out the next few steps the platform had to follow in order to avoid more trouble. Starting with zero appearance of the ad, the blog post read,

“We told Coinfloor Ltd to ensure that future marketing communications made sufficiently clear that the value of investments in Bitcoin was variable and could go down as well as up, that Coinfloor Ltd and the Bitcoin market were unregulated, and that they also did not irresponsibly suggest that purchasing Bitcoin represented a secure investment of one’s savings or pension.”

Bybit To Pull The Plug On Its UK Branch Following FCA’s Crypto Derivative Ban

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Bybit, a cryptocurrency exchange based in Singapore in a recent announcement revealed that it would stop offering its services to the citizens of the United Kingdom.

As the value and demand for crypto are growing untethered, the adoption rate of these digital assets was following suit. This increased adoption of crypto had coerced governments across the globe to keep an eye on the industry and protect their respective citizens from any potential losses considering the volatile nature of the crypto market.

The UK government, particularly the Financial Conduct Authority [FCA] back in October 2020, decided to put a ban on retail crypto derivatives trading. While this was made effective starting from January 2021, products like futures, exchange-traded options, and several others went on to be outlawed.

Steering away from any potential repercussions of continuing in the country, crypto exchange, Bybit revealed that it was bidding adieu to the UK market.

Bybit Gives Its Users Time Until The End Of The Month To Withdraw Funds

In a recent blog post, Bybit urged all its UK users to close all their positions by 31 March 2021. Any further sign-ups using UK mobile numbers as well as IP addresses would reportedly be restrained.

The post read,

“If you are either a U.K. resident or citizen, please close all your positions and withdraw all account balances by 8AM UTC, March 31, 2021. Thereafter, customers located in or are residents of the U.K. will be restricted from accessing or performing any trading activities on Bybit.”

The platform further affirmed that it was doing so to comply with FCA’s crypto derivative ban.

Furthermore, the exchange prompted the aforementioned users to address the situation immediately. The post explained that the exchange would be seeking ways to continue serving its users by urging the regulations to investigate more options. “We hope to be able to earn the privilege to serve you again in the future,” the exchange added.

Komainu To Work With UK Regulators By Storing Seized Crypto

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The crypto industry is full of perpetrators trying to pocket easy money. Komainu, a digital asset custody service provider seems to be aiding the efforts of the UK government in catching these criminals.

In a recent press release, the digital asset custodian revealed that it was joining hands with the Derbyshire Constabulary to store digital assets that were confisticated during investigatory process. Derbyshire Constabulary was reportedly reportedly representing the National Police Chiefs’ Council Cybercrime Programme. Elaborating on the same, Angela McLaren, the Assistant Commissioner who is spearheading the NPCC economic and cybercrime portfolio said,

“On behalf of The National Cybercrime Programme, Derbyshire Constabulary procurement team led a commercial tender to identify a storage solution which law enforcement would be able to use via a framework agreement. [….] The framework agreement also reduces the duplication and costs associated with different forces all running separate tender processes to find their own solution. “

Post this process, Komainu garnered a thumbs up which led to the platform making their storage solution available to police formed across England, Northern Ireland, Scotland, as well as Wales. Apart from this, the British Transport police along with an array of different law enforcement agencies would be employing the technology Komainu has to offer.

Furthermore, the entire contract was aided by CoinShares a prominent digital asset manager. Just two days ago, CoinShares made news after it revealed its leap towards the launch of a Bitcoin exchange-traded product [ETP]. Additionally, a law enforcement consultancy service of the UK, Gentium was also a part of the contract.

The CEO and co-founder of Komainu, Jean-Marie Mognetti also spoke about the firm’s latest move and said,

“We’re excited to support the NPCC in their investigative efforts against criminals looking to take advantage from the perceived anonymity of digital assets for illicit purposes.”

The growth in the value of the crypto industry has been luring in criminals. However, law enforcement isn’t far behind.