The UK’s Financial Conduct Authority (FCA) has issued a final warning to cryptocurrency firms regarding the upcoming financial promotions regime, set to begin in October. In a letter dated September 21, the FCA stated that all firms marketing crypto assets to UK consumers, including overseas firms, must comply with these regulations.
The financial promotions regime provides guidelines for crypto firms to follow before promoting their products within the region. The FCA has promised to strictly enforce these regulations and has warned that violators could face punishment, including imprisonment for up to two years, an unlimited fine, or both.
The FCA has emphasized the importance of this regime in reducing and preventing harm to consumers who invest in cryptoassets that do not match their risk appetite. The regulator believes that consumers should make informed investment decisions based on fair and accurate information.
CryptoSlate has reported that cryptocurrency firms may face challenges in complying with the financial promotions regulations. Gabriel Shapiro, general counsel at Delphi Labs, has stated that a crypto project could spend over $500,000 to ensure compliance with the laws.
The FCA has also expressed its disappointment in the lack of engagement from unregistered overseas cryptocurrency firms regarding the upcoming regulations. Despite the FCA’s efforts to ensure compliance, many foreign firms have refused to engage with the financial regulator. Out of more than 150 companies, only 24 firms responded to a survey sent by the FCA.
This lack of engagement has raised concerns about the readiness of unregistered firms to comply with the new regime, according to the FCA. The regulator has warned that intermediaries, including social media platforms and search engines, have a duty to ensure that unregistered crypto asset firms do not communicate illegal financial promotions to UK consumers through their platforms.
The FCA has highlighted the recently passed Online Safety Bill (OSB), which places a responsibility on these companies to mitigate the risks associated with illegal content, including illicit financial promotions. Despite opposition from several technological companies, the OSB passed its final parliamentary reading on September 19 and is set to become law.
As the financial promotions regime approaches, cryptocurrency firms must ensure they comply with the FCA’s guidelines to avoid potential consequences. The FCA’s aim is to protect consumers from investing in high-risk cryptoassets without sufficient information. It remains to be seen how firms will navigate these regulations and how social media platforms and search engines will enforce compliance to prevent the dissemination of illegal financial promotions to UK consumers.
More detail via CryptoSlate here… ( Image via CryptoSlate )