Why Some Crypto Firms Are Suspending Services in the U.K.

Crypto firms serving U.K. customers are getting ready for the country’s tough new rules on advertising, with some announcing they are cutting off local clients from accessing certain services in order to comply.

While the new regime temporarily gives crypto firms the power to authorize their own promotions in the country, only firms that are registered with the Financial Conduct Authority (FCA) as virtual asset service providers get that privilege. The rules also require firms to make significant changes to their online platforms to better warn potential customers of investment risks.

Unregistered firms like Luno and ByBit have said they are halting services to U.K. clients ahead of the Oct. 8 effective date for the rules, while payments giant PayPal said it was suspending some crypto services until it is compliant with the new rules. Luno, like CoinDesk, is owned by the Digital Currency Group.

Though the FCA consulted on a promotions regime for crypto over a year ago, its guidance only came out a few months back, and “many [firms] feel that there was too short a time period between guidance being issued and the implementation date,” Su Carpenter, director of operations at lobby group CryptoUK said.

“We do know many [firms] are nervous about their interpretation of the guidance and as such will be taking a slow and cautious approach to their future financial promotions,” Carpenter said.

The FCA is letting firms apply for a three-month extension to make the necessary changes. “These rules require significant system builds and operational changes,” the regulator said.

But officials at the FCA told CoinDesk in a Monday interview that the regulator was concerned some international firms were not very interested in complying with the regime.

Read more: UK Financial Regulator Warns Crypto Firms of Jail Time for Unauthorized Ads

It’s technical

Any invitations or benefits offered to a person such as cash or goods to invite investment would be classed as a financial promotion under the FCA regime.

“Essentially, all communications to U.K. consumers in relation to crypto assets which…