Revolut Joins PayPal in Suspending UK Customers as Crypto Companies Prepare to Implement FCA Rules from January

Key Points:

• The FCA introduced new rules for crypto marketing and advertising to protect users from misrepresentation.
• Revolut and PayPal have both suspended crypto purchases until 2024.

Financial technology firm and neobank Revolut has temporarily suspended UK Business clients from buying digital assets. Revolut said the pause on some crypto services will allow the company to adjust to new crypto promotion rules introduced by the Financial Conduct Authority (FCA). The rules are expected to take effect from January 2024.

Revolut is only suspending purchases, as it will allow customers to hold or sell their crypto. In an email reported by City AM, Revolut said the move is necessary to “provide additional protection for new and existing investors of crypto assets.” The email specifies that the changes will affect UK business clients, suggesting that retail clients are not affected.

The impact of Revolut’s suspension may be widespread across the crypto sector in the UK. Even though retail users may not be affected, disruptions in the industry could have a ripple effect that affects individual users and general crypto adoption. Reduced access to crypto may impact online services, including e-commerce, cross-border transactions, and gaming, especially online gambling sites that give players the option to bet with crypto.

The FCA has introduced crypto laws this year to regulate the advertisement and promotion of digital asset services. In a statement published earlier in the year, the agency’s Director of Consumer Investment, Lucy Castledine, stated that all crypto firms marketing to UK customers must be clear and honest in their representations. Castledine also said advertisements must include risk warnings that people can easily understand.

Read More: What Is A Crypto Airdrop and How Does It Work?

According to FCA Executive Director of Consumers and Competition, Sheldon Mills, people should be free to decide whether or not they want to buy crypto. However, research has shown that hasty decisions lead to regret. Mills says the new rules would provide the “right risk warnings” and give people time to decide properly. Also, the rules may force service providers to introduce a mandatory cooling-off period for first-time buyers. In addition, the FCA may outrightly ban ‘refer a friend’ bonuses.

Interestingly, former City Minister Andrew Griffith reportedly appealed to the FCA to consider a softer approach to introducing and enforcing crypto advertising rules. In August, Griffith allegedly sent a letter to the FCA Chief Executive Officer Nikhil Rathi, relaying concerns from crypto companies about the wide scope of the rules, in addition to inadequate information on steps required for compliance. Both Griffith and Prime Minister Rishi Sunak have expressed support for the industry and their desire to establish a regulatory framework that turns the UK into a crypto hub.

Crypto services providers seem wary of the FCA’s rules on promotion and are trying to remain on the law’s good side. Online payments giant PayPal also suspended UK accounts in August in anticipation of the rules. Like Revolut, the company also said users can sell or hold their crypto anytime, but may not complete purchases. 

Unfortunately, crypto exchange Bybit announced its exit from the UK market, citing issues with the new laws. Since introducing the rules, authorities have confirmed more than 200 breaches and issued additional guidance in November. The FCA had planned for the law to take effect in October but moved it to 2024 following a lack of compliance from advertisers.