UK Crypto Showdown: FCA's Protective Measures Face Off Against Industry's Drive for Innovation
- Kraken's co-CEO Arjun Sethi criticized UK crypto rules for hindering retail investor participation and capital flows, citing excessive transaction friction and limited product access. - The FCA defends its 2023 financial promotion rules as necessary safeguards, requiring risk warnings and suitability checks, while enforcing stricter compliance against firms like HTX. - Coinbase countered by launching a UK savings account with 3.75% interest and FSCS protection, leveraging FCA VASP registration to compete
Arjun Sethi, co-CEO of Kraken, has voiced strong opposition to the UK's tough crypto regulations, arguing that they hinder both retail investor involvement and capital movement. The Financial Conduct Authority (FCA) rolled out new rules for financial promotions in late 2023, mandating exchanges to provide risk disclosures, assess investor suitability, and refrain from encouraging trading, according to a
The FCA maintains that these regulations are essential to help investors grasp the risks associated with crypto assets. Authorities have also ramped up enforcement, recently taking legal action against HTX (affiliated with Justin Sun) for violating promotion rules, as mentioned in the report. Sethi’s remarks echo wider industry concerns about the UK’s conservative regulatory stance, especially as the U.S., under former President Donald Trump, has indicated a friendlier approach to digital assets, as the report also notes.
Meanwhile,
These differing approaches underscore the regulatory divergence between the UK and the U.S. Kraken, which may go public as soon as 2026, has concentrated on advocating for clearer regulations, while Coinbase has chosen to comply in order to enter the traditional financial sector. The FCA’s enforcement actions, including a £4.5 million penalty against Coinbase in 2024 for onboarding high-risk clients, illustrate the hurdles crypto companies encounter as they navigate the UK’s changing regulatory environment, as noted in the article.
As the industry seeks to balance investor safety with innovation, Sethi’s criticism and Coinbase’s growth highlight a crucial turning point for crypto adoption in the UK. With global markets facing pressure and regulatory oversight increasing, how companies adjust to these rules will determine the future integration of digital assets.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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