Crypto Companies Breach UK Promotion Rules Over 200 Times, Says FCA
The Financial Conduct Authority (FCA) has reported that crypto companies have violated new UK promotion rules at least 221 times since they came into effect on October 8. The most common breaches include firms failing to provide customers with adequate information on the risks associated with promoted products, risk warnings not being visible due to small fonts, and claims about the safety and ease of using crypto without highlighting the risks involved.
FCA’s Tough Restrictions on Authorized Firms
The FCA has taken action against one firm, rebuilding society.com, by restricting it from approving crypto asset financial promotions. Binance UK, which used the firm for its communications, subsequently suspended onboarding new UK users. The FCA expects authorized firms to take their regulatory obligations seriously when approving financial promotions for crypto asset firms. The watchdog also works with various businesses, including social media platforms and app stores, to block illegal promotions and limit consumer exposure to illicit advertisements.
Routes Crypto Firms Can Use For Promotions
Under the new regime, firms promoting crypto assets in the UK must be authorized or registered by the FCA or have their marketing approved by a trusted firm. Promotions must be transparent, fair, not misleading, and clearly labeled with prominent risk warnings. There are several routes that crypto asset firms can take to communicate promotions lawfully under the new rules, including an authorized person sharing or approving the promotion, a registered crypto firm communicating the promotion under Money Laundering Regulations (MLR), or complying with an exemption in the Financial Promotion Order.
Hot Take: FCA Cracks Down on Crypto Promotion Violations
The FCA’s recent report highlights the prevalence of breaches in the UK’s crypto promotion rules. With over 200 violations, it is clear that many firms are not providing adequate risk information to customers and making misleading claims about the safety and ease of using crypto. The FCA’s restrictions on authorized firms and collaboration with various businesses demonstrate its commitment to protecting UK consumers. However, it is crucial for all stakeholders involved, including social media platforms and payment firms, to play their part in blocking illegal promotions and ensuring transparent and fair marketing practices in the crypto industry.
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