Crypto exchanges operating in the UK will face more reporting requirements over sanctions breaches under new rules introduced in the wake of Russia's war in Ukraine.
The UK Treasury's Office of Financial Sanctions Implementation (OFSI) has updated its guidance to include crypto exchanges over the fear that crypto currencies such as bitcoin are being used to dodge sanctions.
According to the OFSI guidance, companies must immediately report any breach of the rules and freeze the assets involved or else face financial penalties or criminal charges.
Sweeeping sanctions were introduced across the globe in late February and early March following Russia's invasion of Ukraine.And while banks and other financial institutions have long faced stringent requirements over sanctions, this has not always been the case for service providers in the crypto market.
The actions of the OFSI follow guidance issued by the UK's Financial Conduct Authority (FCA) back in March that stated crypto exchanges are not exempt from sanctions obligations.
"Financial sanctions regulations do not differentiate between cryptoassets and other forms of assets," stated the FCA. "The use of cryptoassets to circumvent economic sanctions is a criminal offence under the Money Laundering Regulations 2017 and regulations made under the Sanctions and Anti-Money Laundering Act 2018."
The changes bring more reporting and regulatory requirements for crypto exchanges at a time when many are facing legal and financial difficulties.
For example, the likes of BitPanda, Gemini and BlockFi have all announced job cuts in recent months while Coinbase is also facing a potential class action lawsuit in the US over customer losses.
Meanwhile another crypto exchange Crypto.com recently pulled out of a massive sponsorship deal with the Uefa Champions League football tournament, worth £428m over five years, citing concerns about increased regulation in the crypto market.