Kraken Co-CEO Arjun Sethi has criticized the crypto promotion rules enacted by the UK’s Financial Conduct Authority (FCA), warning that the strict regulatory framework is slowing transactions and limiting access to services for users.
Over the past few months, UK financial watchdogs have come under fire from crypto executives for what many see as an overly cautious approach to the regulation of digital assets.
Cigarette Box Warning on Crypto Sites
In remarks to the Financial Times, Sethi compared the risk warnings on UK crypto platforms to the health warnings seen on cigarette boxes, saying that visiting any digital asset website in the country, including Kraken’s, felt like being told that using the service could be harmful. He further explained that the additional transaction steps imposed under the rules make the user experience worse rather than safer.
Introduced in 2023, the FCA’s Financial Promotions Rule requires all crypto companies operating in the UK to prominently display risk warnings on their websites and add “positive frictions,” such as questionnaires, to gauge whether participants understand the risks associated with crypto investments.
The issue has gained fresh urgency following incidents such as the UK’s decision to ban Coinbase’s “Everything Is Fine” advertisement.
According to the Kraken executive, while disclosures are essential, the UK regulator’s overly rigid approach can discourage customers from investing, potentially leading to missed opportunities. He added that the tighter regulatory atmosphere in the country is denying millions of users of his exchange over 75% of the products that its U.S. customers enjoy.
However, the FCA maintains that its measures aim to safeguard consumers, not discourage investment. It insisted that some users may determine that crypto investing is not suitable for them, an outcome it described as the rules “working as intended.”
Debate Deepens on UK’s Crypto Direction
Sethi is not alone in his criticism. Only a few weeks ago, Bivu Das, the managing director of Kraken UK, spoke of the country’s regulatory measures and the slow approach by watchdogs to set a proper framework.
He added that the Bank of England’s proposal to cap individual stablecoin holdings lacked clarity, a concern also raised by the vice president of international policy at Coinbase, who noted that no other major jurisdiction had introduced such caps.
However, not all observers share these concerns. David Heffron, a financial regulation partner at Pinsent Masons, argued that the Bank of England’s new direction demonstrated a strong focus on financial stability. Likewise, Hannah Meakin of Norton Rose described the move as a foundational step toward maintaining the UK’s competitiveness in digital finance.
Meanwhile, Kraken has continued strengthening its international footprint despite regulatory hurdles, recently acquiring Small Exchange, a CFTC-licensed Designated Contract Market, in a $100 million deal.