Digital Currency Group’s subsidiary, Luna, is set to pause certain services in the UK as the country’s Financial Conduct Authority (FCA) introduces new regulations. The changes, which will come into effect on October 6, will impose restrictions on how cryptocurrency companies can advertise their services, including banning crypto referral programs. As a result, Luno will temporarily halt some crypto trading features to comply with these rules. However, users will still be able to sell and withdraw funds during this period.
Luno’s head of public policy, Nick Taylor, has assured users that the service pause will only impact “some customers” with regards to investing. The extent of this impact remains unclear, as Taylor has not specified which users will be affected. Nevertheless, his explanation provides reassurance that selling and withdrawing functions will not be disrupted. Additionally, Taylor expressed the intention to reintroduce services in the UK at a later date, highlighting that this will occur through a “phased approach.”
While the changes in Luno’s operations are driven by regulatory requirements, Digital Currency Group’s other subsidiaries have faced separate financial difficulties. Gemini’s lending arm is currently undergoing bankruptcy proceedings and faces a substantial debt of $3.5 billion. Similarly, HQ Digital, DCG’s wealth management subsidiary, ceased operations in early 2023. Luno itself discontinued interest-bearing accounts towards the end of 2022. It is important to note that these issues primarily arose due to liquidity concerns within US-based crypto firms.
Industry Response to UK Regulations
Luno is not the only company adjusting its services in response to the upcoming UK regulations. PayPal recently announced its plans to restrict crypto services in the country, starting in October. Like Luno, PayPal will prevent UK users from buying and selling cryptocurrencies but allow them to hold and sell existing holdings. Moreover, back in June, Binance made the decision to withdraw from the UK market. While the exact motives behind Binance’s move remain unclear, it is plausible that regulatory challenges played a role.
As the UK implements new regulations on crypto advertisements and referral programs, Luno has decided to temporarily halt certain crypto trading features. While this may impact some customers’ investment capabilities, users will still be able to sell and withdraw funds. Digital Currency Group’s other subsidiaries have faced separate financial challenges, largely related to liquidity issues. It is crucial for crypto companies to adapt to regulatory changes and find ways to navigate the evolving landscape while ensuring their customers can continue utilizing their services effectively.
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