Earlier this month, one of the world’s leading cryptocurrency exchanges, Coinbase, sent an email to its clientele in the UK explaining a new regulatory requirement.
According to the mail, British customers are now required to complete a risk acknowledgment form, which is in alignment with the imminent financial promotion regulations by the UK’s Financial Conduct Authority (FCA).
With the new regulations, Coinbase aims to foster a more informed trading environment where it ensures that users know the inherent risks of investing in crypto assets.
UK Coinbase Users Required To Take Tests To Prove Their Crypto Knowledge
The new protocol mandates UK users to classify themselves as a specific type of investor. Additionally, they also need to confirm their comprehension of the high-risk nature of cryptocurrency investments. This involves the Appropriateness Assessment which aims to guarantee that users possess the necessary knowledge to make informed investment decisions.
The FCA’s financial promotional rules, which were brought into effect on January 8, are the driving force behind the new changes. The regulations seek to enhance consumer protection in the rapidly evolving crypto market.
Several crypto firms including Binance, ByBit, Nicehash, Revolut, and Luno have adopted these measures to continue their operations in the UK, demonstrating a broader shift towards greater regulatory compliance in the crypto market.
Coinbase is reportedly working with UK-based crypto exchange Archax to get their financial promotions approved by the financial watchdog.
Coinbase Users Dissatisfied With The New Requirements
However, Coinbase customers were not thrilled by the new rule change, with many expressing their dissatisfaction with the process on social media.
Users highlighted the difficulties in filing and submitting the form, citing its unavailability on the Coinbase app and its malfunctioning on the browser.
One user labeled the process as an inconvenience and contrasted it unfavorably with other exchanges. They wrote in an X post that Coinbase asked users to complete the UK FCA declarations Task 1 and 2 but they were nowhere to be found either on the app or when logging in on a computer.
Even if the questionnaire does work, users can only attempt the test twice in 24 hours. If they fail both times, then they will need to wait an entire day to retake the test.
Most of the questions in the Appropriateness Assessment appeared to be standard and straightforward. One example question was as follows:
“Decentralized Finance (DeFi) tokens (eg. AAVE) are crypto assets linked to financial applications built on decentralized blockchain technology. What are the key risks with these types of tokens?”
The question is followed by a disclaimer that reads
“To comply with UK Financial Promotions, you must pass a quick knowledge quiz.”
Users can choose from one of three answers that are provided.
The Regulatory Approach Is Crucial For Maintaining a Secure And Informed Trading Environment
Coinbase’s move to integrate a risk-acknowledgment form for its UK customers signifies a proactive approach in aligning with the Financial Conduct Authority’s financial promotional rules. These steps adhere to regulatory demands and play a crucial role in safeguarding investors by enhancing their understanding of the risks involved in crypto trading.
It is also a testament to the ever-evolving cryptocurrency landscape where such measures are pivotal for maintaining a secure and informed trading environment.