UK’s Financial Conduct Authority Concerned About Unregistered Crypto Firms
The UK’s Financial Conduct Authority (FCA) has raised concerns about the lack of engagement from unregistered crypto firms with the upcoming financial promotions regime. According to a recent survey by the FCA, out of over 150 firms approached, only 24 responded. This lack of response was particularly notable among overseas crypto businesses targeting UK customers.
The FCA expressed its concerns about unregistered firms’ readiness to comply with the new regime, stating that it had “serious concerns” about their lack of engagement.
New Regulations for Crypto Promotions
The new regulations require all crypto asset firms, including those located overseas but marketing to UK consumers, to align with the UK’s financial promotions standards from October 8th. These regulations cover crypto promotions across various media platforms such as websites, social media, and online advertisements.
To comply with these rules, unregistered crypto firms must have their promotions sanctioned by someone authorized by the FCA. The FCA has provided guidance on compliance steps and outlined possible actions against non-compliant entities. The guidelines also include a section on non-compliant crypto memes that could be considered financial promotions.
Consequences for Non-Compliance
Failing to adhere to these regulations could result in a breach of section 21 of the UK’s Financial Services and Markets Act 2000. Such a breach can lead to penalties including up to two years in prison, an unlimited fine, or both.
Warning for Intermediary Entities
The FCA’s warning extends beyond crypto firms to businesses that support unregistered crypto entities. Social networking networks, app shops, search engines, and payment businesses are also included. These intermediaries must be aware of the risks of endorsing firms that engage in unlawful promotions targeting UK consumers.
The FCA also highlighted the obligations of UK businesses under the Proceeds of Crime Act 2002, stating that businesses supporting unregistered crypto asset firms may be at risk of committing money laundering offenses. Intermediaries could inadvertently deal with criminal property through fees accrued from hosting illegal promotions.
Hot Take: FCA Urges Compliance and Highlights Risks
The FCA’s recent warning emphasizes the need for unregistered crypto firms and intermediary entities to comply with the new financial promotions regime. With severe penalties for non-compliance, including potential imprisonment and fines, it is crucial for these entities to take the necessary steps to align with the regulations. The FCA’s concerns about lack of engagement and the risks associated with endorsing unregistered crypto firms highlight the importance of adhering to these rules to protect consumers and prevent money laundering offenses. Compliance is essential for maintaining trust and integrity within the crypto industry.
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