The road to regulatory compliance in the UK for exchanges: Binance partners with local companies, HTX and KuCoin listed on warning list

The Financial Conduct Authority (FCA) in the UK has officially implemented the Financial Services and Markets Act (FSMB) for cryptocurrency companies on October 8th. In response, major companies like Coinbase, OKX, and Binance have released news of collaborations with UK enterprises to ensure compliance with local regulations. However, HTX and KuCoin have been included in the authorities' list of unregistered warnings.

Exchanges Partnering with Local Companies

With the implementation of the Financial Services and Markets Act (FSMB) in the UK, some offshore crypto companies have started collaborating with local enterprises to comply with the regulatory measures and continue offering services to UK users from overseas.

Cryptocurrency exchange Binance revealed in a blog post on October 8th that they have partnered with FCA-regulated peer-to-peer lending company Rebuilding Society to obtain approval for their financial marketing activities.

Additionally, Coinbase and OKX have teamed up with local exchange Archax to assist in reviewing the company's marketing and advertising content.

Simon Barnby, Chief Marketing Officer at Archax, stated to The Block:

We have established a set of evaluation criteria to determine which crypto asset service providers we collaborate with. This includes checks for negative media, comprehensive due diligence, as well as AML or KYC checks.

Prior to this, Bybit announced its withdrawal from the UK market citing compliance with new regulations.

HTX and KuCoin Listed on Warning List

Furthermore, on the same day the new regulations took effect, the FCA issued a statement cautioning against 143 unregistered crypto companies.

This marks the first public warning since the implementation of these regulatory measures, listing companies operating without authorization, including major exchanges HTX and KuCoin.

The FCA highlighted in the specific warning:

These companies may be promoting financial services or products without our permission, and investors should avoid trading with them.

FCA's Cryptocurrency Financial Advertising Regulations

The FCA's new regulations on cryptocurrency financial advertising are stringent, covering various forms such as websites, social media, and physical promotions.

Crypto companies in the UK are required to adhere to the following four channels for their financial advertising activities:

• Conducted by personnel authorized by the FCA
• Submission of advertising proposals to authorized personnel for approval before proceeding
• Carried out by crypto companies registered with the FCA for anti-money laundering regulations
• Advertising activities meeting specific exemption criteria under the regulations are considered legal

Previously reported, failure to comply with these financial advertising regulations by crypto asset companies may result in a violation of Section 21 of the FSMB in the UK. This criminal offense could lead to a maximum penalty of 2 years imprisonment, unlimited fines, or both.