In a recent development, the Financial Conduct Authority (FCA), the regulatory body overseeing financial markets in the United Kingdom, has expanded its cautionary list to include prominent cryptocurrency exchanges, labeling them as "unauthorized entities" that citizens should steer clear of.

This list of warnings is accompanied by an advisory urging individuals to refrain from conducting business with these entities. Among the 143 new additions are major cryptocurrency exchanges, such as HTX, owned by Huobi, and KuCoin.

The FCA's decision to include these exchanges on the list is rooted in concerns regarding their operation without the requisite licenses or compliance with UK regulations, potentially exposing customers to risks. Consequently, the FCA strongly advises against engaging with any entity on the warning list, cautioning that it may expose individuals to fraudulent activities or financial losses.

Entities listed in this manner are prohibited from conducting operations within the UK. To be removed from the list, an exchange must either register with the FCA or secure a temporary permit, allowing them to operate within the country legally.

Back in July, Jayson Probin, the crypto financial promotions lead at the FCA, emphasized that those who do not comply with the regulations could face criminal charges. He stated, "We will take robust action against persons illegally promoting to UK consumers. This may include, but is not limited to, placing firms on our warning list, requesting takedowns of websites, social media accounts, apps, and all other promotions that are in breach, and enforcement action."

Given that Huobi-owned HTX and KuCoin are significant players in the cryptocurrency industry, their inclusion on the warning list may raise concerns among UK crypto investors, potentially causing hesitation in using these exchanges.

Additionally, in response to issues surrounding the warning list, the FCA has expanded its rules on financial promotions to encompass cryptocurrency asset service providers (CASPs). These regulations apply to all cryptocurrency firms, regardless of their geographical location, if they market their services to UK consumers.

Under these new rules, known as the Financial Promotions (FinProm) Regime, cryptocurrency firms are required to provide clear risk warnings to consumers in the UK and meet elevated technical standards, which include implementing a 24-hour cooling-off period for new customers. The FinProm Regime is designed to ensure that cryptocurrency promotions in the UK are carried out fairly, transparently, and with integrity.

In response to these new promotion rules, several cryptocurrency exchanges, including Binance, OKX, and MoonPay, have announced their close cooperation with the FCA to ensure compliance.

However, it has been reported that several crypto exchanges in the UK are struggling to adhere to these new promotion rules. According to the FCA, major exchanges like KuCoin and HTX may have promoted their services in the UK without proper authorization, leading to their inclusion on the warning list, along with advice for consumers to avoid conducting business with them, as they are not permitted to operate in the United Kingdom.

The FCA's stringent approach to crypto regulations is evident in its approval process. As of August, out of 291 applications for registration received since 2020, only 38, or roughly 13%, were granted approval. This rigorous approval rate underscores the FCA's commitment to ensuring that only legitimate and compliant businesses operate within the UK's cryptocurrency space.

As of October 9, 2023, the FCA's list of registered crypto asset providers consists of 42 entities, including well-known names like Bitstamp, Revolut, and Gemini. Recently, PayPal temporarily suspended cryptocurrency transactions for its UK customers as it works to align with the FCA's requirements.

Towards the end of September, the Dubai-based cryptocurrency exchange Bybit also suspended all its services in the UK due to "regulatory changes." These actions highlight the FCA's unwavering dedication to establishing a consistent set of regulatory standards for all digital asset transactions in the UK, thereby fostering a trustworthy environment for cryptocurrency interactions.