Cryptocurrency exchange Bybit has recently announced its decision to halt its services in the United Kingdom (UK) due to impending regulatory measures imposed by the country’s Financial Conduct Authority (FCA).
Bybit’s suspension process will commence on October 1, beginning with the cessation of new account registrations. Subsequently, on October 8, the exchange will suspend new deposits, new contracts, and changes to positions for existing users in the UK. This decision follows the FCA’s introduction of new regulations concerning the marketing and communication practices of crypto businesses.
Bybit stated, “Bybit has chosen to embrace the regulation proactively and pause our services in this market.” The company views this suspension as an opportunity to allocate its efforts and resources to ensure compliance with the future regulations outlined by UK authorities.
FCA’s Regulatory Developments
In June, the FCA introduced a revised financial promotions regime aimed at regulating the marketing of cryptocurrency assets. On September 21, the FCA issued a warning to firms, reminding them of the October 8 deadline and the potential risk of facing criminal charges if they fail to comply.
While the FCA indicated that some firms might have until January 2024 to comply with the marketing rules, they would require prior approval from the regulator.
Bybit’s Global Retraction
This isn’t the first time Bybit has scaled back its services globally in response to regulatory changes. In May, the exchange revealed plans to exit the Canadian market, citing increased regulatory scrutiny in the country. However, Bybit has also expanded into new markets, including Kazakhstan, where it received in-principle approval to operate as a crypto custody service provider in May.
Bybit’s CEO, Ben Zhou, recently commented on the forthcoming marketing rules, stating that they would significantly impact the market, potentially necessitating the company’s withdrawal from the UK market. Zhou remarked, “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 explained that the new amendments have reshaped the financial solicitation ecosystem to an extent that makes it impossible to practice reverse solicitation, a tactic that many firms previously employed to navigate the earlier regulations.
Industry-Wide Impact
Bybit is not alone in facing the challenges posed by the new FCA rules. Several industry executives and observers have noted the profound effect of this policy shift. Cryptocurrency exchange Luno, for instance, disclosed plans to prevent certain clients from investing in crypto beginning on October 6, just two days before the enforcement of the new FCA rules.
Similarly, Gabriel Shapiro, the general counsel of Delphi Labs, has cautioned that most crypto firms will struggle to comply with the new financial promotions regulations.
In summary, Bybit’s suspension of its UK services in response to regulatory changes underscores the evolving landscape of cryptocurrency regulations globally, with broader implications for the industry as a whole.
