Leading derivatives platform BitMEX not authorized to operate in the UK
The UK’s Financial Conduct Authority (FCA) has warned that leading derivatives exchange BitMEX is not authorized to operate in the UK. The FCA’s warning is a clear sign that the UK authorities want a regulated crypto asset industry.
On March 3, UK-based crypto traders woke up to a warning by the Financial Conduct Authority (FCA) that leading derivatives exchange, BitMEX, is not authorized to operate in the UK. While that does not mean that UK-based traders are prohibited from dealing with BitMEX, the FCA’s warning is a clear sign that the UK authorities want a regulated crypto asset industry.
FCA says don’t use BitMEX
This month the UK Financial Conduct Authority issued a warning against using the crypto derivatives trading platform, BitMEX. It believes that the Seychelles-based company is providing financial services to UK residents without proper authorization.
“This firm is not authorized by us and is targeting people in the UK. Based upon information we hold, we believe it is carrying on regulated activities that require authorization,” the FCA wrote in the statement.
“We strongly advise you to only deal with financial firms that are authorized by us,” the regulator added.
The FCA’s warning does not automatically mean that it is illegal for a UK-based trader to buy and sell crypto derivatives on BitMEX. However, it could mean that the exchange will limit its exposure to the UK market to reduce the potential of fines by the British regulator.
As a result, BitMEX could ask its UK-based users to cease their trading activities and withdraw their funds or, at the very least, discourage UK citizens from signing up to its platform. To date, neither of those two things have happened. Instead, BitMEX has publicly stated that it is working to address the situation.
Crypto yes, but regulated
The FCA is arguably one of the most crypto-friendly financial regulators in the world. The London-based regulatory authority has had several crypto and blockchain startups in its Fintech Sandbox program and has been welcoming towards digital asset companies looking to set up shop within the country’s borders.
However, the FCA does not want the UK crypto industry to operate without rules and regulations. In July 2019, the regulator issued an official ‘Guidance on Cryptoassets’ after consulting with the blockchain industry.
Moreover, since January 10, the FCA is the “anti-money laundering and counter-terrorist financing (AML/CTF) supervisor of UK crypto asset businesses,” and requires all crypto businesses to register.
Digital asset exchanges – especially those that offer derivatives – who have clients in the UK but are not registered as a crypto asset business with the FCA will likely experience similar attention from the UK’s financial regulator.
As the digital asset industry continues to grow, so will regulators’ actions towards unregulated market activities. What that will mean for global bitcoin trading volumes remains to be seen.
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