Digital currency derivatives platform Bybit is shutting down its services in the United Kingdom, following a ban by the financial markets regulator that outlawed digital currency derivatives.
Bybit announced in an update to its customers that it had ceased to provide all services to U.K. users. These users have until March 31 to close all their positions and withdraw all their balances. Thereafter, U.K. users “will be restricted from accessing or performing any trading activities on Bybit. New sign ups using U.K. mobiles number and/or IP addresses will be restricted immediately.”
Bybit further claimed that it will seek dialogue with regulators to explore other options in the future. “We hope to be able to earn the privilege to serve you again in the future,” it stated.
Based in Singapore but registered in the British Virgin Islands, Bybit is considered to be the third largest futures exchange in regards to open interest. It ranks only behind Binance and OKEx, with over $2 billion in open interest on its platform.
However, according to the Financial Conduct Authority, Bybit has been operating despite the regulator’s directive. The FCA banned digital currency derivative sales to retail investors in October 2020. The ban came into effect on January 6, 2021.
Nevertheless, Bybit has been operating all through. This led the FCA to issue a public warning against the firm a week before ‘it decided to shut down operations.’
“We believe this firm has been providing financial services or products in the UK without our authorization,” the warning stated. It added, “This firm is not authorised by us and is targeting people in the UK. Based upon information we hold, we believe it is carrying on regulated activities which require authorisation.”
The FCA believes digital derivatives to be “ill-suited for retail consumers due to the harm they pose.” It cited their lack of reliable basis for valuation, prevalence of market abuse and cyber theft as some of the dangers that investors expose themselves to when they invest in such products.