FCA Issues Final Warning to Crypto Firms Over Product Promotion
The UK’s Financial Conduct Authority (FCA) has issued a “final warning” to cryptocurrency firms regarding new rules on promoting products. The FCA expressed concern about the industry’s lack of engagement with authorities on this issue.
The new regulations, which govern how crypto firms and intermediaries promote products in the UK, will take effect on October 8. The FCA warned that firms that continue to promote crypto assets to UK consumers without necessary approvals could face imprisonment, fines, or both.
The FCA stated that it is troubled by the poor engagement from unregistered overseas crypto asset firms who have UK customers. Out of over 150 firms surveyed, only 24 responded, indicating a lack of interest in complying with the new regulations.
FCA Raises Serious Concerns Over Lack of Industry Engagement
The FCA expressed serious concerns about the industry’s readiness to adhere to the new regulations. Non-compliant firms will be placed on a warning list and may face criminal prosecutions in severe cases.
Social media platforms, app stores, and payment firms also have a role to play in preventing illegal financial promotions by unregistered crypto asset firms from being communicated to UK consumers. Ads targeting UK consumers can be enabled through social media platforms and search engines.
The FCA reminded businesses supporting unregistered crypto asset firms to consider their obligations under the Proceeds of Crime Act 2002. It expects these firms to prevent illegal financial promotions from reaching UK consumers.
New Regulations Restrict Financial Promotions for Unauthorized Crypto Businesses
Once the financial promotion regime takes effect, unauthorized and unregistered crypto businesses can only communicate approved financial promotions or those within certain exemptions. The definition of a financial promotion is broad and includes communications made through websites or apps. The majority of crypto asset firms catering to UK consumers will fall within the scope of the regulations.
The FCA also advised consumers to stay vigilant and check the warning list, which will be continually updated once the new regime takes effect, to ensure they are dealing with compliant firms.
Hot Take: FCA Cracks Down on Non-Compliant Crypto Promotions
The FCA’s final warning to crypto firms regarding product promotion underscores the importance of complying with the new regulations. The lack of engagement from many firms is a cause for concern and may result in criminal prosecutions for non-compliance. The FCA is calling on social media platforms, app stores, and payment firms to prevent illegal financial promotions from reaching UK consumers. With the new rules coming into effect, unauthorized crypto businesses will face restrictions on their financial promotions. It is crucial for both firms and consumers to stay informed and adhere to these regulations to ensure a safe and compliant crypto market in the UK.
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