On January 4, cryptocurrency platform Coinbase tweeted that all its current United Kingdom (UK) users are required to complete two additional verification forms. This additional verification, the company said, would be used to ensure that Coinbase’s financial products are right for the users, based on their level of financial knowledge. Newer users will also have to complete this new verification and will have to wait for a 24-hour “cool-off period” after they start the onboarding process to begin trading on Coinbase; this is to “to ensure users reflect before making investment decisions they consider high-risk.” These new measures are being taken to comply with the UK’s Financial Conduct Authority’s (FCA) rules for promoting crypto assets in June 2023. These rules classify crypto assets as “restricted mass market investments” and allow these assets to be mass marketed to the citizens of the UK subject to the restrictions that the promotion must include clear risk warnings and positive frictions (asking customers to look into the crypto asset before investing) and ban companies from putting in place investment incentives. These rules also set out certain client categorization requirements and appropriateness assessments. Crypto firms are expected to ensure compliance by January 8, 2024. Besides Coinbase, other crypto firms such as Seychelles-based OKX, Crypto.com, and Gemini have also said that they would bring in similar verification measures to ensure compliance with the rules. What are these “appropriateness assessments”? Crypto firms operating in the UK must ask their users questions that cover their understanding of ideas…
