Payment giant PayPal has announced its decision to cease cryptocurrency purchases on its platform for UK customers, with the suspension taking effect in October. In a communication to its customers, PayPal explained that this move is a temporary measure aligned with the implementation of new regulations set to come into force on October 8. The company aims to ensure compliance with these regulations and plans to resume cryptocurrency services in early 2024.
While PayPal temporarily halts cryptocurrency purchases, it assures its customers that they can continue to hold and sell their existing crypto holdings without any interruption. The company also highlighted its commitment to working in close cooperation with regulatory authorities worldwide, in an effort to adhere to the evolving market rules and regulations.
The decision by PayPal reflects a broader global trend of regulatory bodies striving to establish comprehensive frameworks for the regulation of cryptocurrencies. A series of recent incidents, including the collapse of several cryptocurrency firms, have underscored the necessity for enhanced consumer protection within the digital asset sector.
This announcement by PayPal coincides with the UK Financial Conduct Authority’s (FCA) introduction of more stringent marketing rules for crypto assets. Starting in October, British consumers seeking to purchase crypto assets, including widely recognized cryptocurrencies such as Bitcoin (BTC), will be subjected to a mandatory 24-hour “cooling-off” period. Additionally, the FCA’s new rules prohibit “refer a friend” bonuses for crypto buyers and mandate clear risk warnings in promotional material.
These regulations align with the UK government’s forthcoming plans to regulate cryptocurrencies under a new financial services law. As the absence of comprehensive global regulations for cryptocurrencies continues, regulators worldwide are intensifying their scrutiny of the sector.
Sheldon Mills, Executive Director at the FCA’s Consumers and Competition Division, emphasized the importance of informed decision-making when investing in cryptocurrencies. He acknowledged that impulsive investment choices can lead to regret and reiterated the inherently high-risk nature of crypto assets.
Despite these cautionary statements, the FCA’s research highlights a significant increase in crypto ownership, with an estimated doubling of ownership among surveyed individuals from 2021 to 2022. Approximately 10% of the 2,000 respondents reported owning cryptocurrencies
Under the new rules, crypto firms must prominently display warnings that emphasize the high-risk nature of investments and the possibility of losing invested funds. Industry experts, like Myron Jobson, Senior Personal Finance Analyst at interactive investor, have welcomed the FCA’s stricter regulations. Jobson stressed the need for a robust customer knowledge framework to ensure fair practices and consumer protection standards are understood by all stakeholders in the crypto space.