Digital asset exchange Bybit mulls a potential exit from the UK as new rules from the Financial Conduct Authority (FCA) swing into effect on Oct 8.
Bybit CEO Ben Zhou explained that the new marketing rules set to be enforced in a few weeks will tighten the market, possibly forcing the firm off the UK market.
“We do see regulation becoming more strict. Most likely, we’ll have to retreat in many countries. I think the UK, we’ll have to exit very soon. We recently exited France.”
Zhou added that the new amendment has changed the ecosystem around financial solicitation to the extent that it makes it impossible to practice reverse solicitation, a practice most firms adopted to maneuver the previous laws.
“FCA has explicitly contacted all the major players: us, OKX, Binance, everyone — and asked what our plan is to deal with this new law. And the new law is that if you use English as a language, they will see you as trying to solicit their users, so you cannot claim that you are in reverse solicitation. Everyone is in trouble. So everyone is thinking of plans for how to deal with this new law.”
The FCA has moved to regulate crypto investments through several policies that industry players have described as harmful to the growth of the market.
For the FCA, the new rules seek to protect the average investor as it makes crypto advertising “clear, fair and not misleading, labeled with prominent risk warnings and must not inappropriately incentivize people to invest.”
The new crypto marketing rules place a ban on “refer a friend” bonuses from Oct 8 including a cool-off period for first-time investors.
The wider market feels the impact
Bybit will not be alone in facing the challenges caused by the new FCA rules as several industry executives and observers have pointed out the effect of such policy.
On Sept 11, cryptocurrency exchange Luno revealed plans to halt certain clients from investing in crypto from Oct 6 two days before the enforcement of the new FCA rules.
“The FCA has implemented new rules for crypto firms. As a result, all compliant crypto firms with U.K. customers are making several changes to their platforms to comply with the new regulations. For Luno, this includes pausing the ability to invest through the platform for some customers for the time being,” Nick Taylor Luno’s head of policy.
Similarly, Delphi Labs Gabriel Shapiro noted the effect it could have specifically on centralized exchanges causing a strain in the adoption drive. He added that it may be difficult for the FCA to enforce the rules among decentralized exchanges.
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