FCA to Oversee Crypto Regulation in UK, Begins with BitMEX Warning

By Nivesh Rustgi
Published March 5, 2020 Updated March 5, 2020
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Financial Conduct Authority in the UK

FCA to Oversee Crypto Regulation in UK, Begins with BitMEX Warning

By Nivesh Rustgi
Published March 5, 2020 Updated March 5, 2020

The Financial Conduct Authority in the UK issued a warning on 3rd March, 2020 claiming that BitMEX “is carrying on regulated activities which require authorisation.” It has been classified as an unauthorized firm providing financial services to its’ citizen.

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BitMEX cryptocurrency exchange, and one of the largest derivatives market for Bitcoin comes under the regulator’s attentions after a rule change from 10th January, 2020 in the United Kingdom.

Moreover, as repoted earlier on CoinGape, the FCA has banned crypto-linked derivatives in the country, it does create a scare in the market.

bitmex warning
FCA Warning on BitMEX

The warning to the traders and investors about BitMEX notes that,

If you use an unauthorised firm, you won’t have access to the Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS) so you’re unlikely to get your money back if things go wrong.

Hence, in case of frauds and unethical conduct from BitMEX, the traders will not have any rights to claim as per UK’s laws.

On whether or not the FCA will be restricting BitMEX’s services in the country is highly unlikely. The warning only excludes reimbursements and possible scam from now.

Apparently, Kraken was also included in the list, however, later confirmed to be a mistake by the FCA.

Since BitMEX is one of the largest derivatives exchange in the market, a government crack-down of the platform could cause massive harm to the industry. Nevertheless, it will also provide an opportunity to build regulation or other players to take advantage from regulations.

A New 2020 Rule Change Prompts the Warning?

According to findings, Bitcoin and other cryptocurrencies were not regulated in the UK due to lack of laws in the country. The letter published earlier this year in January notes,

Exchange tokens (such as Bitcoin and cryptocurrency equivalents) are not currently regulated in the UK. This means the transfer, purchase and sale of exchange tokens, all currently fall outside our regulatory remit.

Moreover, the FCA will be supervising over the realm to avoid the risks related to money laundering, and terrorist financing.

Cryptocurrency investor and analyst, alias, I am Nomad tweeted on the warning by FCA that,

“You need our permission but only as of 6 weeks ago.” – FCA

fca now governs crypto business
FCA Letter dated 13th January 2020 (Source)

However, the FCA letter also notes that its’ powers do not cover ‘how the businesses are conducted within the country.’  It seems like the warning letter issues yesterday is calling for stringent KYC/ALM compliance along with implementation of travel rule.

Do you think that the new change will after the prices or cause structural changes? Please share your views with us.  

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Disclaimer
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
About Author
Nivesh Rustgi
1181 Articles
Nivesh from Engineering Background is a full-time Crypto Analyst at Coingape. He is an atheist who believes in love and cultural diversity. He believes that Cryptocurrency is a necessity to deter corruption. He holds small amounts of cryptocurrencies. Faith and fear are two sides of the same coin. Follow him on Twitter at @nivishoes or mail him at nivesh(at)coingape.com

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