FTX Hits The Radar of U.K. Financial Watchdog
Regulatory scrutiny around the world is putting cryptocurrency exchanges under increasing pressure, like FTX.
The Financial Conduct Authority, which previously raised concerns about Binance’s deal with the nationwide primary payment network, is now giving an alarm call to warn of FTX’s threat.
In the latest warning issued last Friday, the U.K. financial watchdog stated that the exchange was not authorized to operate as a financial service provider in the country.
FTX Is Not An Authorized Company, FCA Warns
FCA stressed that the firm led by Sam Bankman-Fried is targeting UK consumers without regulatory oversight, or authorization. Using the services of an unauthorized entity is extremely problematic if the company encounters financial difficulties.
To wit
“You will not have access to the Financial Ombudsman Service or be protected by the Financial Services Compensation Scheme (FSCS), so you are unlikely to get your money back if things go wrong.”
The UK watchdog has put strict requirements on over 50,000 financial companies in the U.K. In order to legally operate in the country, those companies are required to meet certain requirements including company registration and anti-money laundering compliance.
Simply put, crypto-related firms will need to obtain an FCA-approved crypto license and adopt KYC restrictions for customers.
Under the FCA AML/CTF Cryptoasset Registration Regime, any business that has not complied with the anti-money laundering rules can be suspended and those that have failed to meet requirements are not allowed to conduct regulated business activities in the country.
FTX is not the only firm that has come under the UK watchdog’s radar. Since interest and investment in the crypto market started to bloom throughout the year 2021, regulators around the world have paid close attention to their operations.
Scrutiny became more intense since the nascent industry constantly hit crime records.
The Financial Conduct Authority has requested that cryptocurrency exchanges and trading platforms obtain the appropriate licenses; failing to comply with this request will result in the FCA blocking access to domestic markets for foreign cryptocurrency exchanges that are not registered in the country.
Last year, Binance was the target of both the UK and Japanese watch dogs due to its lack of domestic licenses. The leading exchange had to make adjustments in order to satisfy the conditions set forth by the authority.
A significant number of regulatory bodies and financial institutions in other nations issued warnings that were quite similar to those issued by the U.K. South Korea is an example.
Companies operating in the cryptocurrency industry in the country will have to register with the appropriate authorities and acquire the necessary permissions.
Should they fail to comply, the blocking of their websites will take effect immediately. In addition, consumers who participate in such unlicensed trades run the risk of incurring penalties.
FTX To Save Troubled Firms
In addition to the regulatory pressure on its unauthorized operation, there is another factor that has put FTX in the spotlight recently: its ability to bail out bankrupt crypto companies.
Sam Bankman Fried’s discussion with CNBC’s Squawk Box highlighted that heroic potential. FTX’s CEO indicated that the company has $1 billion to spend on acquisitions and bailouts.
So Sam grabbed his cape once more, and we may see another bailout in the near future, albeit the CEO did not specify the amount. On Twitter, speculation has lately risen that Voyager could have been the next name.
Sam verified in the interview that FTX is still in good health.
The company behind the FTX exchange appears to be holding up well during this crypto winter. FTX and Sam Bankman-Fried are still far from running out of capital to pursue the fantastic opportunities in the market, which is turning red as a result of the failure of Bitcoin (BTC) prices to rebound.
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OhNoCryptocurrency via https://www.ohnocrypto.com/ @Nicholas Say, @Khareem Sudlow