The UK’s Financial Conduct Authority (FCA) has issued 146 alerts regarding cryptocurrency asset promotions on the first day new regulations took effect to oversee the marketing of these investments.
As of October 8, 2023, companies looking to promote crypto assets in the UK are required to be authorized or registered with the FCA or have their marketing materials approved by an authorized firm. The FCA mandates that all promotions must be clear, fair, and not misleading, prominently display risk warnings, and avoid inappropriate incentives for potential investors.
To assist consumers in recognizing potential legal violations in crypto promotions, the FCA has created a ‘Warning List’ that highlights firms that may be breaching these regulations.
As the compliance deadline approached last month, the FCA issued a warning to unregistered international crypto firms, indicating that failure to adhere to the new rules could lead to fines and imprisonment. In a letter titled ‘final warning’ directed at crypto companies targeting UK clients, the FCA expressed concern over the inadequate response from non-registered overseas firms.
“We are concerned by the poor engagement from many unregistered, overseas cryptoasset firms who have UK customers on this important change,” the FCA noted. Despite outreach efforts, only 24 firms responded to a survey sent to more than 150 companies.
The FCA cautioned that firms that do not comply may violate section 21 of the Financial Services and Markets Act 2000, which could be considered a criminal offense punishable by up to two years in prison, an unlimited fine, or both. The regulator reiterated its commitment to taking action against firms that illegally promote services to UK consumers, including adding these firms to the Warning List and taking steps to eliminate unauthorized financial promotions, such as blocking websites, social media accounts, and apps.