The latest reports of Revolut limiting its crypto offerings to UK businesses raised many questions about Britain’s plan to embrace the digital currency industry. Meanwhile, with its incoming Markets in Crypto-Assets (MiCA) Regulation, the neighboring European Union is attracting many international crypto companies.
Although Revolut did not come up with any official confirmation, City A.M. cited an email from the fintech firm to report that it would pause the ability to purchase crypto for its business-to-business customers on Revolut Business.
Revolut confirmed the report's authenticity: “These requirements aim to enhance the customer journey and provide additional protection for new and existing investors of crypto assets. As a result, we’ll need to adjust our current Business crypto offering to make sure all of the new requirements are met.”
The fintech firm did not detail the circumstances behind the decision, but the report described that it was to align with the incoming requirements of the Financial Conduct Authority (FCA ). Revolut will restrict the services on 3 January, while the FCA rules will become effective on 8 January.
Interestingly, the restrictions will be only on business accounts and retail UK customers on Revolut can buy and sell crypto without any disruption.
Crypto-Friendly EU
While Revolut will restrict its crypto services in the UK, international companies are entering the European Union to offer crypto. Robinhood, based in America, recently launched crypto trading in the EU under its Lithuania-licensed entity.
When it comes to crypto regulations, the EU is at the forefront. The pan-European legislative body has already approved the MiCA rules, which will become effective next year. Although MiCA garnered much criticism due to some harsh reporting requirements, crypto companies are optimistic about the rules.
Coinbase is another big name that has strengthened its presence in the EU with multiple licenses. It is regulated in Germany, Ireland, the Netherlands, Spain, and Italy. The Nasdaq-listed exchange also made Germany its talent hub and has identified Ireland as its primary global regulatory hub.
Other companies like eToro, Binance, Crypto.com, and many other big and small brands obtained crypto registrations with European regulators to continue their operations in the continent.
The UK’s Failed Crypto Plan?
The UK is a significant market when it comes to financial services. London is considered the European hub for banks and other financial companies. Although the closure of Brexit forced many of these companies to establish another hub for their European operations, this shift did little to dent London's domination. Meanwhile, the UK legislators are pushing to make the country a hub for fintech. Though, the FCA remains at the center of all crypto regulations in the country.
The FCA updated its crypto marketing rules in early November, changing crypto promotions targeting UK consumers. The guidance, effective from 8 January, clarifies how authorized firms should integrate the “Consumer Duty Act” into their promotional activities. The new rules will mandate a 24-hour “cooling off period” for investors. Further, it will require a ban on incentives like referral bonuses.
Revolut is one of many companies to suspend its services due to these rules. Paypal temporarily suspended its crypto offerings in the country. Like Paypal, Revolut will only stop purchasing the crypto, allowing users to hold and sell cryptocurrencies. In contrast to PayPal, Revolut will only bring limitations to its business customers.
Revolut’s Focus on Regulatory Requirements
Meanwhile, Revolut is in the process of obtaining a banking license in the UK. Currently, the fintech is operating in the country, its largest market, as a payment institution. It made several structural changes in its business to overcome the roadblocks to obtaining the license, which it applied in 2021.
The UK is one of many markets where Revolut confines its crypto offerings. Earlier this year, the US arm of the fintech ceased to offer all of its crypto services, citing the harsh regulatory environment in the country. Revolut additionally offers crypto in the EU, but users there cannot transfer their crypto holdings from the platform.
