The UK’s FCA issued additional guidance for crypto firms on promotion compliance, following its October 2023 regulations.
The Financial Conduct Authority (FCA), the financial regulator of the United Kingdom, has issued additional guidance for crypto firms that advertise crypto services.
The FCA implemented regulations regarding cryptocurrency promotion in October 2023 and has been assisting the industry in adhering to them ever since.
The regulator conducted an assessment of the manner in which companies were fulfilling the prerequisites for the promotion of crypto services. It identified companies that met the criteria, contacted them for information, and conducted site visits.
The FCA was interested in the performance of companies in the following areas: the 24-hour cooling-off period, personalized risk warnings, client categorization, investment assessment, recordkeeping, and due diligence of crypto assets. Good and subpar practices were the categories into which they classified their discoveries.
The majority of the advice provided on the subjects was uncomplicated. For instance, a prudent approach to the cooling-off period was as follows:
“Giving clear information that there is a cooling-off period, and explaining that it is there to ensure consumers take the time to consider if the product is right for them.”
A few of the suggestions were more substantial. “The assessment stated that due diligence for certain firms appeared to be excessively preoccupied with determining whether the cryptoasset qualified as a security in specific jurisdictions, rather than being customized to meet UK regulatory requirements.” The same applies:
“We have seen firms relying on industry comparisons to benchmark what is acceptable. Given the levels of poor practice in the market, firms should not be doing this.”
“Instead, we expect firms to engage with us directly to drive up standards across the sector,” the assessment continued.
In June 2023, the Financial Conduct Authority (FCA) declared that new regulations would be implemented in October of the same year. They were intended to supersede the regulations that were established in August 2022. The FCA anticipated that there would be a lack of complete compliance by October and granted certain companies until January 8, 2024, to achieve compliance.
The FCA reported that it had identified more than 200 violations of the promotional rules within a mere two weeks of their implementation. After its banking associate was subjected to restrictions, even Binance encountered compliance issues.
In November, the FCA implemented supplementary regulations to assist cryptocurrency companies in achieving compliance.
