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Nexo Resumes UK Client Registrations with Full FCA Compliance

AuthorSyed Ali Haider
Crypto News Author
Fact Checked by Joshua Downes
Last updated: September 03, 2024
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Nexo Resumes UK Client Registrations with Full FCA Compliance

Highlights:

  • Nexo resumes UK client registrations with enhanced compliance measures.
  • New onboarding includes investor assessments and cool-off periods.
  • The company prioritizes client education on regulatory frameworks.

On September 3, Nexo, a leading digital asset service provider, resumed new client registrations in the UK after a 10-month hiatus. The move follows Nexo’s multiple upgrades to ensure compliance with Financial Conduct Authority (FCA) guidelines. 

It has also partnered with Gateway 21 — an FCA-authorized and regulated financial promotion approver — to ensure compliance with all financial promotion rules imposed by the FCA. “When faced with rigorous yet necessary regulation, we chose to stand firm, diligently adapting our platform to meet these stringent requirements,” said Elitsa Taskova, Chief Product Officer of Nexo.

Nexo Enhances UK Onboarding with New Investor Assessments and Cool-Off Periods

According to Nexo, these updates involve implementing cool-off periods, specialized risk warning messages, and other essential compliance measures. Users must complete an investor categorization questionnaire and an appropriateness assessment before accessing the platform. These measures have become standard practice for crypto firms serving clients in the UK.

The initial set of questionnaires was designed to categorize investors into three groups: restricted investors, high-net-worth investors, and certified sophisticated investors. The second set focused on assessing users’ understanding of the risks associated with crypto investments, including products such as crypto-backed credits.

While users can retake the Investor Categorization test as many times as needed, the Appropriateness Assessment has a built-in cool-off period. After two consecutive failed attempts, a 24-hour cool-off period is enforced, which extends to seven days after the sixth failed attempt.

Nexo stated:

“The cool-off period serves the purpose of allowing you to take a step back and consider whether investing in crypto assets is indeed appropriate for you. These assessments ensure users’ investment knowledge aligns with the Financial Conduct Authority (FCA) and its guidance.”

Nexo to Support UK Client Support with New Educational Resources and FCA Guidelines

In addition to resuming services, Nexo intends to launch tailored educational resources and provide dedicated support to assist UK clients in navigating the FCA’s guidelines. The company emphasized that as the crypto industry grows more complex, simply offering a functional onboarding process is no longer enough to meet clients’ needs.

The firm said:

“Nexo believes it has a responsibility to clarify the regulatory framework for clients, highlight the roles of relevant authorities, and ensure clients understand both their obligations and ours.”

Further, Taskova said Nexo aims to equip clients with the knowledge and confidence to navigate the complexities of the digital asset space. This will be achieved through various educational resources and tailored materials to guide them through the newly enhanced UK-specific onboarding process.

Nexo paused new user registrations in the UK in December 2023 to implement regulatory upgrades and enhance compliance with the FCA guidelines. In October 2023, Nexo began phasing out certain UK services in response to FCA regulatory changes. On October 8, 2023, Nexo stopped cashback payouts for both the Nexo Exchange and Nexo Card and also suspended its referral and affiliate programs.

UK’s New Crypto Promotions Rules

The FCA’s new crypto promotion rules took effect on October 8, 2023. Since then, the regulator issued 450 alerts for illegal promotions and warned that even crypto memes could breach the rules. Exchanges like Coinbase and Binance removed news feeds for UK users to comply.

The regulator warned that unregistered crypto firms not following new financial promotions guidelines could face criminal charges under the UK’s Financial Services and Markets Act 2000, with penalties including up to two years in prison and unlimited fines. The rules aim to improve transparency in crypto marketing but have posed challenges, leading companies like PayPal and Revolut to struggle and Bybit to exit the UK market.

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