The FCA Warns Unregistered Crypto Firms about Lack of Engagement
The UK’s Financial Conduct Authority (FCA) has issued a warning to unregistered crypto firms regarding their lack of engagement with the regulator. In a letter sent on Thursday, the FCA expressed concern that many firms have refused to engage with them, stating that only 24 out of over 150 firms responded to a survey. The FCA is particularly worried about overseas crypto asset firms that have customers in the UK. The regulator believes that this lack of engagement raises serious concerns about these firms’ readiness to comply with the upcoming financial promotions regime.
Incoming Financial Promotions Regime for Crypto Asset Firms
Starting from October 8th, all crypto asset firms marketing to UK consumers, including those based overseas, will be required to comply with the new UK financial promotions regime. This includes promotions across various media forms such as websites, social media outlets, and online advertising. To comply with the guidelines, unregistered crypto asset firms must ensure that their promotions are approved by an FCA authorized person. The FCA’s letter provides guidance on compliance and outlines potential actions against non-compliant firms, including considering non-compliant crypto memes as financial promotions.
Consequences of Non-Compliance
Unregistered crypto asset firms that fail to comply with the new regime may be in breach of section 21 of the UK’s Financial Services and Markets Act 2000. This would be a criminal offense punishable by up to two years imprisonment, an unlimited fine, or both.
Warning to Intermediary Businesses
The FCA also addressed its expectations for businesses that support unregistered crypto asset firms, including social media platforms, app stores, search engines, and payments firms. These businesses were urged to be aware of the risks associated with supporting firms engaged in illegal promotions targeting UK consumers. The FCA reminded UK businesses to carefully consider their obligations under the Proceeds of Crime Act 2002, as they may be at risk of committing money laundering offenses by supporting these illegal financial promotions.
Hot Take: FCA Urges Compliance and Engagement from Crypto Firms
The FCA’s warning to unregistered crypto firms highlights the importance of compliance with the upcoming financial promotions regime. Lack of engagement with the regulator raises concerns about firms’ readiness to meet regulatory requirements. It is crucial for crypto asset firms, including those based overseas, to ensure that their promotions are approved by an authorized person to avoid potential criminal charges and penalties. Additionally, intermediary businesses must be cautious about supporting illegal promotions and consider their obligations under the law. Overall, compliance and engagement are key for the crypto industry to maintain trust and protect consumers.
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