First Enforcement Action Against Crypto Asset Enabler
The United Kingdom's Financial Conduct Authority (FCA) has fined CB Payments Limited (CBPL), a payment subsidiary of Coinbase, £3,503,546 ($4.5 million) for breaching compliance rules. The FCA stated that this marks its first enforcement action against a firm enabling cryptoasset trading. CBPL, also known as Coinbase Payments, does not directly handle crypto transactions but serves as a gateway for customers to trade via other Coinbase Group entities. Notably, CBPL is not registered to conduct cryptoasset activities in the UK.
Systematic Compliance Failures Over Nearly Two Years
In October 2020, CBPL entered a voluntary agreement with the FCA, restricting it from onboarding new high-risk customers until compliance issues were resolved. However, the regulator found that CBPL onboarded and served 13,416 high-risk customers in violation of the restriction. Approximately 31% of these customers deposited around $24.9 million, which was subsequently used to make withdrawals and execute multiple cryptoasset transactions totaling roughly $226 million through other Coinbase Group entities. The FCA revealed that these violations went undetected for nearly two years due to inadequate control measures.
FCA's Stern Warning to the Crypto Sector
Therese Chambers, Joint Executive Director of Enforcement and Market Oversight at the FCA, underscored the severity of financial crime risks in the crypto space. “Firms facilitating cryptoasset trading must have robust anti-money laundering controls in place,” she said, adding that the FCA will continue to take action against those who fail to comply. The penalty sends a clear signal to all crypto-related businesses operating in the UK: regulatory compliance is non-negotiable. Coinbase has not yet issued a public statement, but the industry expects heightened scrutiny on payment gateways and crypto service providers.