Solana's largest protocol, Marinade, considers ending operations in the UK due to regulatory risks.
The protocol with the largest TVL on the Solana blockchain, Marinade, recently banned UK users from using its front-end interface to address the uncertainty and risks brought by UK regulatory requirements. Many crypto industry players have been exiting the UK market recently. Is this an isolated case or a warning signal regarding the regulatory environment in the UK?
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Marinade is a liquidity staking protocol on the Solana blockchain, where users can freely stake SOL and receive mSOL as proof of stake, enabling them to perform other DeFi operations with the token and benefit from the staking rewards, similar to Lido.
Marinade is also the largest protocol on Solana, with a Total Value Locked (TVL) of $260 million according to DeFillama data, representing about 72% of the total value on Solana, making it quite significant.
The team recently quietly shut down the front-end website service in the UK, rendering it inaccessible in the UK region. The official team members stated that due to new regulatory requirements in the UK, they decided to cease operations to mitigate legal risks. However, users can still withdraw funds through SDKs or other means.
In addition to Marinade, more and more crypto-related projects or companies are exiting the UK market. Orca Finance, the largest decentralized exchange on Solana, has also ceased support for the UK market's front-end interface, citing concerns over UK regulatory risks.
What are the UK regulatory rules that are driving various projects away? The UK has introduced substantial regulatory measures for the crypto industry this year, including the "Financial promotion rules for cryptoassets" and its supplement, the "Financial promotions on social media", requiring crypto companies and individuals promoting financial products to comply with the Financial Conduct Authority (FCA) regulations in the UK.
One of the most controversial requirements in the above regulations is that crypto service providers must provide a 24-hour cooling-off period for new users. This mechanism necessitates changes to the backend operations of crypto companies. Some operators find it easier to exit the UK market than to restructure their systems, as seen with Bybit and Luno announcing their exit from the UK market in September.
Impact on DeFi?Currently, UK regulations do not explicitly state whether DeFi projects need to comply. However, most projects' content on Twitter could potentially fit the definition of financial promotion in the UK, causing some projects on the blockchain to weigh potential risks and uncertainties. This is evident in actions taken by Marinade and Orca Finance as mentioned above.
Looking ahead, when regulations for blockchain services like DeFi become clearer, it can help the industry develop healthily, rather than regulations becoming a source of uncertainty and cost for operators.
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