UK Regulator Tells Stablecoin Savings Firm: Get Your Ads off the Tube
The British Financial Conduct Authority (FCA) has ordered the London Underground to take down advertisements for startup Zeux – a company that uses stablecoins as part of a high-interest savings offering.
The FCA appears to have expressed concern that Zeux’s business model involves using customer investments to buy stablecoin holdings “before being transferred to a financial services provider in China,” per British newspaper The Daily Telegraph.
Zeux had paid for London Underground advertisements to promote its 5% interest product for savings investors for customers who have lost “interest in their bank.”
However, the regulator objected to the fact that the ads made no reference to the fact that customer funds would be converted from fiat to stablecoins before, as the Telegraph states, “being transferred to a financial services provider in China.”
The blockchain startup has also allegedly violated British financial regulations by failing to obtain required permits.
Per the Zeux website, the company “uses stablecoins as an intermediary to reduce transaction and clearing costs and to help UK customers to get access to global products that they previously had no access to.”
The company makes no mention of which stablecoins it uses in the FAQ section of its website.
The regulator stated that Zeux was authorized to “carry out account information services and payment initiation services,” but does not have the necessary permits to “hold customer money.”
The FCA had asked Zeux to take down its ads in late January, with the company agreeing to end its campaign. Despite its pledge, the startup’s ads have continued to be displayed around the British capital’s subway system.
The Daily Telegraph asked Zeux whether customers would be able to access their money if the company was to file for bankruptcy, as the deposited funds are not covered by the UK’s Financial Services Compensation Scheme.
The scheme protects customers should financial services providers go out of business, providing compensation of up to USD 110,000.
A spokesperson for Zeux told the paper,
“We are and will continue to work closely with the FCA, and will make no further comment until we are able to clarify our position with them.”