Key Insights
- Bybit crypto exchange is planning to exit the UK due to upcoming regulatory changes set to take effect in a few weeks.
- The Financial Conduct Authority will enforce new rules to improve transparency in crypto product marketing.
- The regulations will significantly impact solicitation practices in the crypto industry.
Bybit, one of the world’s leading cryptocurrency exchange platforms, is preparing to exit the United Kingdom in anticipation of impending marketing regulations.
These new rules, set to come into effect within the next few weeks, are poised to reshape the crypto landscape in the UK. Ben Zhou, co-founder and CEO of Bybit, shared insights into the company’s strategic decision, stating,
We do see regulation becoming more stringent. Most likely, we’ll have to withdraw from many countries. I believe the UK will require our swift exit, and we have recently concluded our operations in France.
Why will Bybit withdraw from the UK?
The reason for this withdrawal is the Financial Conduct Authority‘s (FCA) introduction of new rules scheduled for implementation on October 8th.
These rules aim to introduce a cooling-off period for first-time cryptocurrency investors and enhance transparency and accuracy in the marketing of crypto products.
Zhou emphasized that the forthcoming regulations will usher in a transformative shift in solicitation practices within the crypto industry.
Despite the ban on crypto derivative products in the UK since 2021, some exchanges have continued to serve UK customers through reverse solicitation. However, this practice is likely to face extinction after October 8th.
He further revealed,
The FCA has proactively reached out to all major players, including us, OKX, Binance, and others, inquiring about our plans to comply with these new regulations. Under the new law, if you use English as a language, you will be considered as attempting to solicit their users, effectively nullifying the concept of reverse solicitation. Everyone is grappling with the implications of this new law, and everyone is formulating strategies to navigate it.
Read also! How Binance Is Trying to Outwit EU Regulators and Break into the UK Market
For Bybit, the most probable outcome is a complete disengagement from the UK market, Zhou asserted.
This expansion of regulations marks a significant development in the crypto industry. George Morris, a partner at Simmons & Simmons, noted that while promotional rules have been in place for securities firms for decades, they are now being extended to encompass cryptocurrency companies.
He described these rules as intricate and extensive, cautioning that even maintaining a website accessible to UK customers could be construed as promotional activity as of October 8th.
Morris pointed out,
It’s not solely UK-based firms that will be subject to these rules; anyone with a website accessible in the UK will fall under these requirements.
Bybit, originally established in 2018 with a primary focus on derivatives trading, has in recent years diversified its offerings to include spot trading and other products. Nevertheless, its foundation in derivatives remains robust. Presently, the company boasts approximately a 23% share of open interest in bitcoin futures, according to data from The Block Research.