PayPal halts crypto purchases in the UK amid FCA crackdown
Payments giant PayPal is hitting the pause button on cryptocurrency purchases in the United Kingdom until early 2024. The move comes in response to the UK’s financial watchdog, the Financial Conduct Authority (FCA), tightening up the rules around cryptocurrency activities.
Starting from October 1, PayPal’s UK customers won’t be able to make new purchases of cryptocurrencies. However, users who have already bought crypto using their PayPal accounts can still hold onto them or sell them whenever they want.
“We’re taking this measure in response to new rules enacted by the U.K. Financial Conduct Authority (FCA) that require crypto firms to implement additional steps before customers can purchase crypto,” PayPal said in a statement.
The FCA is cracking down on potential money laundering risks linked to crypto transactions. These new rules line up with the guidelines set out by the Financial Action Task Force’s “Travel Rule,” which kicks in on September 1. Additionally, the FCA is planning to lay down stricter regulations for crypto advertising in the UK later this year.
In light of these regulatory changes, PayPal is adjusting its offerings in the UK to stay in line with the shifting landscape of crypto rules and consumer safeguards. The company has been making some big moves in the world of crypto, especially in the United States. One major step they’ve taken is the launch of their stablecoin, PayPal USD (PYUSD), which they introduced just earlier this month.
“We remain deeply committed to our compliance obligations and PayPal consistently works closely with regulators around the world to adhere to applicable rules and regulations in the markets in which we operate,” PayPal added.
Since January 2020, the City watchdog has become the anti-money laundering and counter terrorist financing supervisor of UK’s crypto asset firms. At the time, the FCA kicked off a registration scheme for crypto-asset firms with an initial deadline of one year.
Earlier in June, the UK introduced new advertising rules for firms marketing crypto assets to consumers. Citing concern over investor protection, the FCA watchdog suggests that customers should take a brief period to educate themselves further about the risks involved.
Under the new rules, the financial watchdog introduced a 24-hour “cooling-off” period specifically for first-time investors. This pause allows investors to take a step back and reconsider their decision before proceeding with this type of risky investment. Additionally, the practice of offering ‘refer a friend’ bonuses will be prohibited.
The new regulations also require firms promoting crypto products or services to include a clear risk warning in their promotions and verify that individuals have the necessary knowledge and experience to invest in cryptocurrencies.
