In a recent report, it has been revealed that Luna, a subsidiary of Digital Currency Group (DCG), is planning to pause certain services in the United Kingdom. This decision comes ahead of new regulations set by the U.K.’s Financial Conduct Authority (FCA) and will have a significant impact on the crypto trading features offered by Luna.
New Regulatory Restrictions
The forthcoming rules imposed by the FCA will impose severe restrictions on how cryptocurrency companies can promote their services. One of the major consequences of these regulations is the ban on crypto referral programs. As a result, Luna will be required to halt its crypto trading features by October 6, according to an email sent to its users.
Luno’s Head of Public Policy, Nick Taylor, clarified that while certain features will be paused, users will still be able to sell and withdraw their funds. The temporary pause will only affect a select group of customers, and the company has not provided specific details on which users will be impacted. Furthermore, Taylor mentioned that Luna plans to reintroduce its services in the U.K. at a later date, although no specific timeline has been provided. The reintroduction of services will be done gradually through a phased approach.
Financial Difficulties and Regulatory Changes
Luna’s decision to pause its services in the U.K. comes on the heels of financial difficulties faced by other subsidiaries of Digital Currency Group. Gemini’s lending arm, for instance, is currently undergoing bankruptcy proceedings and has significant debts to creditors amounting to $3.5 billion. Additionally, DCG’s wealth management subsidiary, HQ Digital, shut down earlier this year in 2023. In late 2022, Luno itself discontinued its interest-bearing accounts. However, unlike the liquidity issues faced by U.S. crypto firms, Luna’s decision in the U.K. is primarily driven by the regulatory changes that are poised to reshape the market in the country.
Luna is not the only company that has scaled back its services in anticipation of the new U.K. regulations. PayPal recently announced its plans to restrict its crypto services in the country starting in October. Similar to Luna, PayPal will restrict U.K. users from buying and selling crypto, but holding and selling will still be permitted. Furthermore, Binance withdrew from the U.K. market in June, though it is not entirely clear if this decision was influenced by the upcoming regulatory changes or if it was due to general regulatory difficulties.
The pause in certain crypto services by Luna in the U.K. is a direct response to the new regulatory landscape set by the FCA. As the deadline for compliance approaches, many crypto companies are reevaluating their offerings and making strategic decisions to navigate the evolving regulatory environment. The phased approach taken by Luna indicates their intention to reintroduce services in the future, but the exact timeline remains uncertain. It will be interesting to see how these regulatory changes shape the crypto market in the U.K. and how companies like Luna adapt to the new requirements imposed by the FCA.
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