The Financial Conduct Authority (FCA) of the United Kingdom has imposed restrictions on the peer-to-peer lending platform Rebuildingsociety.com Ltd (Ref. No. 656344), which had recently formed a partnership with crypto exchange Binance for compliance with local marketing regulations. According to a notice dated Oct. 10, 2023, the FCA has disallowed Rebuildingsociety from “approving the content of any financial promotion for a Qualifying Cryptoasset for communication by an unauthorised person” and mandated the withdrawal of any existing approvals.
Impact on Binance Partnership
The regulatory action suggests a setback for Binance as it may have lost a crucial partner in complying with the FCA’s marketing regime, which came into effect on Oct. 8, 2023. Binance had allied with Rebuildingsociety to enable its UK users to access the exchange’s offerings through a localized domain, given that Binance is not registered with the FCA. This partnership, announced less than a week prior to the restrictions, was aimed at marketing spot trading, non-fungible tokens, and other products to UK users. However, with the recent FCA notice, Rebuildingsociety is required to inform its clients, including Binance, about the restrictions, withdraw any ads offering to approve financial promotions, and confirm compliance to the FCA in writing.
The FCA’s marketing regime initiated on Oct. 8, aims at ensuring that firms, including those in the crypto sector, deliver “clear, fair and not misleading” advertisements or face legal ramifications. While certain firms might attain approval for a January 2024 deadline amidst rule ambiguity, it remains uncertain if Binance intends to pursue this extension.
Cryptocurrency derivatives exchange dYdX has announced that it will be exiting the Canadian market due to regulatory restrictions. In an April 7 blog post, the exchange revealed that it would be winding down services in Canada over the next seven days. The move will begin with halting the onboarding of new users located in the country.
On April 14, dYdX will shift all existing Canadian users to “close-only mode,” which will allow them to withdraw funds but not engage in any new transactions. The exchange hopes for a change in the regulatory climate that will allow it to resume services in Canada.
In the blog post, dYdX stated its commitment to providing transparency around product decisions and democratizing access to financial opportunity. The exchange expressed hope that the regulatory climate in Canada would eventually change, enabling it to resume services in the country.
This move by dYdX follows the Canadian Securities Administrators announcing additional restrictions for crypto exchanges’ registration requirements in the country. According to the rules, platforms were prohibited from permitting Canadian clients to enter into crypto contracts to buy and sell any crypto asset that is itself a security and/or a derivative.
The regulatory restrictions in Canada have become a growing concern for cryptocurrency exchanges, with many having to shut down or exit the market altogether. It remains to be seen how the regulatory landscape will evolve in the future.
Notably, dYdX faced criticism from users and those in the crypto space in September 2022. The exchange had offered a $25 deposit bonus for confirming someone’s identity using a live webcam image. The promotion was later ended, citing “overwhelming demand” rather than privacy concerns put forth.
dYdX is a popular cryptocurrency derivatives exchange that allows users to trade various cryptocurrency assets on margin. The exchange has gained popularity in recent years due to its user-friendly platform and high liquidity.
In conclusion, dYdX’s decision to exit the Canadian market highlights the increasing challenges faced by cryptocurrency exchanges in the country. The regulatory restrictions have made it difficult for exchanges to operate, and it remains to be seen how the situation will evolve in the future. Nevertheless, dYdX’s commitment to transparency and democratizing access to financial opportunity remains unwavering.
Cryptocurrency derivatives exchange dYdX has announced that it will be exiting the Canadian market over the next seven days. In an April 7 blog post, the company stated that it will be “winding down services” in Canada, beginning with the halting of new user onboarding in the country. On April 14, the exchange will move all existing Canadian users to “close-only mode,” allowing them to only withdraw funds.
According to dYdX, the decision was made due to increased regulatory restrictions in Canada. The Canadian Securities Administrators recently announced additional restrictions for crypto exchanges’ registration requirements in the country. The new rules require platforms to prohibit Canadian clients from entering into crypto contracts to buy and sell any crypto asset that is a security and/or a derivative.
dYdX stated in its blog post that it is committed to transparency and democratizing access to financial opportunity. The exchange expressed hope that the regulatory climate in Canada will eventually change, allowing it to resume its services in the country.
This move by dYdX follows criticisms the exchange received in September 2022 when it offered a $25 deposit bonus for confirming someone’s identity using a live webcam image. Many dYdX users and individuals in the crypto space raised privacy concerns, and the exchange ended the program due to “overwhelming demand.”
dYdX is a decentralized exchange that specializes in cryptocurrency derivatives trading. It is among the many cryptocurrency exchanges that have faced increased regulatory scrutiny in recent years, particularly regarding investor protection and anti-money laundering measures.
Although dYdX’s exit from the Canadian market may be a setback for the company, it is reflective of the challenges that many cryptocurrency exchanges face in navigating regulatory environments around the world. As the crypto space continues to evolve and mature, it is likely that regulatory authorities will continue to monitor and regulate the industry to ensure investor protection and mitigate risks associated with the emerging asset class.
Tinkoff Investments, the brokerage services platform arm of Russia’s largest online bank, Tinkoff, is researching cryptocurrency investment services despite Russia’s Central Bank withholding the bank from launching such services.
The head of Tinkoff Investments, Dmitry Panchenko, engaged in a recent interview with local news agency TASS and revealed that the brokerage platform is currently working on research and development initiatives focusing on cryptocurrency-related services.
He however did not elaborate in detail, stating that it is too early to talk about specific project ideas. Panchecnko stated that they are still at the research stage and are examining certain cryptocurrency investment services, and therefore have not come up with a specific framework for such products.
Though Panchenko admitted that “brokers cannot offer this service by law” in Russia, he stated that Tinkoff Investments is potentially setting the stage of research and developments in terms of possible approaches. He explained that Tinkoff Investments is particularly considering crypto products like those being offered by firms like international payment giant PayPal and crypto-friendly apps such as Robinhood and Revolut.
Panchenko said that:
“We are looking at what is happening in the world with Robinhood, Revolut, PayPal. We see this evolution, but in Russia, this is not happening yet.”
The bank’s executive stated that although local authorities have still now allowed firms like Tinkoff Investments to offer crypto investments services, he said that the citizens of Russia are still actively trading cryptocurrency on foreign platforms.
Despite the restrictions, Panchenko disclosed that Russian citizens have invested more than $15 billion worth of cryptocurrencies on foreign exchanges.
The executive mentioned that brokerages such as Tinkoff are well placed to benefit from the adoption of cryptocurrency investment services. He stated that Tinkoff has witnessed rising demand specifically for investments in cryptocurrency as opposed to using cryptocurrency to pay for goods and services, which is prohibited in Russia by the nation’s crypto law “On Digital Financial Assets.” There are central bank-imposed restrictions that bar non-qualified investors looking to invest or buy digital assets.
Earlier this year, the country created a legal definition of crypto assets under its Digital FinancialAssets (DFA) law.
Despite such legal bans and restrictions, Pancheko said that it is important for brokers to make crypto assets available to investors alongside other investment instruments such as bonds and stocks.
“We see demand for investment purposes – not for the purpose of using it as a means of payment or a means of transporting assets, but as an investment instrument for investments and potential profit,” he stated.
While Russian rules are likely to remain prohibitive in the near future, Pancheko stated that Tinkoff Investments may look at alternative approaches to invest in cryptocurrencies.
Tough Central Bank Policy
In June, as reported by Blockchain.News, Tinkoff bank announced that it wanted to provide crypto trading to its customers but stated that it would take time because of a tough stance from the country’s central bank.
On June 3, Tinkoff CEO, Oliver Hughes, stated that qualified investors who understand what they are doing want to invest in cryptocurrencies in Russia. He mentioned currently there is no mechanism for the bank to provide cryptocurrencies to its clients because the central bank has maintained a tough stance.
In 2020, Russia gave crypto assets legal status but banned them from being used for payments, stating that only the Russian ruble could be regarded as legal tender.
In late May, Elvira Nabiullina, the governor of Russia’s central bank, stated that digital currency was the “future of the country’s financial system,” referring to the Central Bank Digital Currencies (CBDCs), not cryptocurrencies.