The Financial Conduct Authority (FCA) has issued a warning to cryptocurrency businesses in the United Kingdom, urging them to comply with new financial promotion rules. However, the majority of these businesses are seemingly ignoring the regulations, as only 24 out of over 150 firms have responded to a survey sent by the regulator regarding the new rules. The FCA’s rules, which will come into effect next month, will impose strict limitations on how “unauthorized and unregistered crypto businesses” can communicate their financial promotions.
Expressing concern over the lack of engagement from unregistered overseas crypto asset firms with UK customers, the FCA emphasized the importance of adhering to the new rules in a public letter. According to the regulator, crypto firms must stop making illegal financial promotions to UK consumers as of October 8. Failure to comply with these rules could result in penalties, including imprisonment for up to two years, an unlimited fine, or both.
The FCA’s rules explicitly prohibit unauthorized crypto firms from enticing UK customers to invest in crypto assets through promotions, a regulation that already applies to other financial products. The communications permitted under these rules are limited to purely factual information, along with instructions for existing customers on how to transfer, withdraw, or sell their existing assets.
It is worth noting that the rules encompass a wide range of communication channels, including apps and social media. In fact, the FCA previously published guidelines in July, stating that even crypto memes could potentially violate the agency’s promotion rules.
Last week, rumors circulated that cryptocurrency exchange Bybit was considering leaving the UK due to the challenges of complying with the new regulations. However, Bybit’s CEO, Ben Zhou, promptly clarified that the company remains committed to compliance and that no final decisions have been made regarding its operations in the region.
The FCA’s focus is not solely on non-compliant crypto businesses. The regulator also aims to target firms associated with these businesses, such as social media apps, search engines, app stores, and payment companies. If these platforms are connected to unregistered crypto firms, they may be held liable for money laundering offenses.
In conclusion, the FCA has urged crypto businesses to promptly consider their position if they believe they will breach the rules once they come into force. With only a small fraction of firms engaging with the regulator’s survey, it appears that many in the industry have yet to fully grasp the significance of the new regulations.
More detail via Decrypt here… ( Image via Decrypt )