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Revolut hits pause on certain UK crypto services, US senator Liz Warren takes aim at the “revolving door” between government and crypto lobbyists, and Binance seals a $2.7bn settlement with the CFTC.
Revolut has become the latest firm to suspend some of its crypto services in the UK, as the final deadline to comply with new promotion rules looms in the New Year.
On Monday (December 18), Revolut sent an email to all UK business customers informing them that they will no longer be able to purchase crypto-assets after January 3, 2024.
On January 8, 2024, new crypto-asset promotion rules from the Financial Conduct Authority (FCA) will come into effect, with which Revolut is not yet able to comply.
“These requirements aim to enhance the customer journey and provide additional protection for new and existing investors of crypto-assets,” the email notes.
“As a result, we'll need to adjust our current business crypto offering to make sure all of the new requirements are met.”
Revolut Business customers will still be able to hold or sell their crypto-assets, and no other Revolut Business features will be affected.
The neobank did not say when the pause on crypto purchases will be lifted, advising customers to make “alternative arrangements” if necessary.
Speaking with Vixio, a Revolut spokesperson stressed that the pause only applies to business accounts in the UK.
However, in October this year, as reported by Vixio, Revolut US took even more drastic action, disabling all crypto services for all US customers.
At the time, a Revolut spokesperson told Vixio that the decision was taken due to uncertainties and the “evolving regulatory environment” in the US.
‘Challenging’ promotional requirements
Revolut UK did not specify which crypto-asset promotion rule it will be unable to comply with before the deadline.
However, given that Revolut was working towards the January deadline rather than the original October deadline, it must be one of four rules that the FCA offered extra time on.
These were the “challenging” rules that require back-end changes, namely personalised risk warnings, 24-hour cooling-off periods, client categorisation and appropriateness assessments.
Revolut now joins PayPal, Binance, Bybit and many other firms that have had to suspend certain crypto services or exit the UK due to difficulties complying with the new regime.
Senator Warren tangles with crypto lobbyists
In the US, this week Senator Elizabeth Warren (D-MA) wrote to three crypto organisations to demand further information on their use of “revolving door” tactics to influence crypto legislation.
The recipients — Blockchain Association, Coin Center and Coinbase — were asked to provide details on their use of former public officials to block proposed legislation on crypto terrorist financing.
According to Warren, new information from 2023 has revealed that crypto is an “essential part” of the operation of terrorist groups such as Hamas.
She added that Changpeng Zhao, former CEO of Binance, pleaded guilty to charges that included failure to implement measures to prevent and report suspicious transactions with terrorists.
Warren and other senators have therefore proposed new legislation to address gaps in the anti-money laundering/counter-terrorism financing (AML/CTF) frameworks that bad actors use crypto to exploit.
But instead of supporting these efforts, Warren said the crypto industry has focused on “delaying” the new rules and “denying” that crypto is used by terrorists and criminals.
This response has been supported by a “small army” of former law enforcement and defence officials, she said, that have rallied to the crypto lobbyists' cause.
For example, Coinbase announced last month that former defence secretary Mark Esper and former counter-terrorism advisor Frances Townsend have joined its Global Advisory Council.
Esper served in the Cabinet under President Donald Trump, and Townsend served under President George W Bush.
When the council was formed in May this year, Warren also complained that it initially had three former members of Congress among its members, including one who served on the House Intelligence Committee.
Similarly, the Blockchain Association has sent letters to Capitol Hill signed by 40 former military, intelligence and national security officials, downplaying illicit activity in crypto relative to traditional finance.
“This abuse of the revolving door is appalling, revealing that the crypto industry is spending millions to give itself a veneer of legitimacy while fighting tooth and nail to stonewall common-sense rules designed to restrict the use of crypto for terror financing,” said Warren.
The letter asks for information from the three crypto firms as to how much their advisors are compensated and whether any of them were approached while still employed by the government.
Warren also asked the three organisations to detail their advisors’ expertise in crypto financial crime, if any, and to provide policies on ethics and conflicts of interest.
Responding to Warren on X, Coin Center executive director Jerry Brito called the letter “impertinent” and a “bullying publicity stunt”.
Paul Grewal, chief legal officer at Coinbase, said that he found Warren’s letter “appalling”.
“What's appalling is smearing the integrity of people who have served our country, in uniform and otherwise,” he said. “Especially when that same ‘door’ leads to your own office.”
Court approves Binance settlement with CFTC
Finally, this week a US federal court approved a $2.7bn settlement between Binance and the Commodity Futures Trading Commission (CFTC).
The approval formalises the previously announced settlement and its two constituent parts: namely a disgorgement of $1.35bn of “ill-gotten” transaction fees and an additional $1.35bn penalty.
It also formalises a $150m civil penalty that former Binance CEO Zhao must pay to the CFTC.
A separate order requires Samuel Lim, former chief compliance officer at Binance, to pay a $1.5m civil penalty for aiding and abetting Binance’s “wilful evasion” of US law.
The CFTC also confirmed that Binance has now “offboarded” three unnamed quantitative trading firms identified in the complaint as accessing Binance’s services illegally.
According to the complaint, Binance allowed the firms to trade through shell companies without location or ID checks, in violation of Binance’s own compliance controls and US law.
