The Financial Conduct Authority (FCA) has announced that the new rules governing financial promotions will go into effect on October 8th.
On the heels of the disclosure, the FCA claimed it has written to domestic and international businesses marketing crypto-assets to UK consumers, requesting that they adhere to the forthcoming crypto ad compliance rules or risk facing criminal charges that may result in up to two years in prison.
Defaulters would be penalized when identified, FCA Crypto Financial Promotions Lead Jayson Probin stated in a LinkedIn post, “This is a critical change for the industry.” Such messages will be sent to crypto influencers in the future often.
The FCA warned major social media companies earlier this year to do more “to protect consumers.” Sheldon Mills, executive director of the FCA, added that although it is up to individuals to decide whether they want to purchase cryptocurrencies, research has shown that consumers frequently make rash choices that cost them money in the long run.
However, Mills added, the new regulations governing cryptocurrency advertisements will allow investors plenty of time and the necessary knowledge to make wise choices.
The FCA has created four “legal routes” for cryptocurrency firms to follow when promoting crypto assets in the UK. These choices include online advertising and promotions for websites, mobile apps, and social media posts.
Cryptocurrency firms will have to publish the promotion through a “authorized person,” according to a letter that was signed by Lucy Castledine, director of consumer investments supervision, policy, and competition, and Victoria McLoughlin, head of digital assets supervision, policy, and competition in the Department of Market Interventions.
The second option is to have the promotion communicated by someone who isn’t allowed but has had it approved by someone who is. Any organization or person permitted to conduct a regulated activity under the Financial Services and Markets Act (FSMA) 2000 may qualify as this “authorized person.”
Once more, the promotion might be sent via a cryptocurrency company authorized by UK anti-money laundering laws. The cryptocurrency company would need to use the exception made available by the Financial Promotion Order of the FSMA for the final option.
