Many of the FCA-warned firms appear to be dubious high-yield return schemes, but warnings have also been issued to legitimate businesses.
Since their implementation in early October, crypto-promoting businesses have violated the United Kingdom’s new crypto marketing rules at least 221 times, according to the country’s financial regulator.
In a statement released on October 25, the U.K. Financial Conduct Authority (FCA) said that since the October 8 implementation of crypto promotion rules, firms are still failing to provide sufficient risk warnings, provide adequate risk information, and make claims about the safety, security, or ease of using crypto without highlighting the risks involved.
The FCA reported on October 9 that it issued 146 notices for violations of the new rules in the first 24 hours after the new regime went into effect.
Find out the 3 common issues we've identified with #cryptoasset financial promotions.
Consumers should check the FCA Warning List before making any investment in #cryptohttps://t.co/CKn4cFxb11
— Financial Conduct Authority (@TheFCA) October 25, 2023While many of the FCA’s crypto-related alerts appear to be fraudulent schemes promising high returns on crypto investments, the FCA has also taken action against businesses that appear to be legitimate.
Rebuildingsociety, the FCA-regulated firm Binance partnered with to approve its marketing and communications to comply with the FCA’s new regulations, was subject to restrictions, according to a statement released on October 10. Subsequently, Binance ceased accepting new British users.
“We expect authorized firms approving the financial promotions of cryptoasset firms to take their regulatory obligations seriously,” the FCA statement said. “Where this is not happening, we will take action.”
It added that it collaborates with social media platforms, app stores, search engines, domain registrars, and payment processors to remove, block, and halt the flow of prohibited funds to promotions.
Under the new rules, crypto-related advertisements can only be promoted or approved by FCA-authorized or regulated firms. This regulation applies to all businesses, including those without a physical presence in the United Kingdom.
The promotions must contain “prominent risk warnings” and not incentivize cryptocurrency investment. In the United Kingdom, promotions such as referral bonuses and parodies are prohibited and restricted.
James Young, compliance manager at Transak, told reporters that the FCA’s regime is “very challenging” for businesses to implement, but he believes consumer protection will increase adoption “exponentially.”
