Key Points:
- FCA Concerns: The FCA expresses serious concerns about the lack of engagement from unregistered crypto firms regarding the upcoming financial promotions regime.
- Compliance Deadline: Starting October 8, all crypto asset firms targeting UK consumers must adhere to the strict UK financial promotions regime.
- Legal Consequences: Failure to comply with the new regulations may lead to criminal offenses and harsh penalties, including imprisonment and fines.
The UK’s Financial Conduct Authority has issued a stern warning to cryptocurrency firms regarding their apparent reluctance to engage with new regulatory rules. In a letter sent on Thursday, the regulatory body expressed its concerns about the lack of cooperation from unregistered crypto companies regarding the upcoming financial promotions regime.
Despite the regulator’s concerted efforts, only 24 out of over 150 firms surveyed responded. Of particular concern to the FCA are overseas crypto asset firms serving UK customers, as their lack of engagement raises doubts about their readiness to adhere to the new regulatory framework.
Starting from October 8, all crypto asset firms targeting UK consumers, whether domestic or foreign-based, must comply with the UK financial promotions regime. These rules encompass a wide range of promotional methods, including websites, social media platforms, and online advertising. Unregistered crypto asset firms must ensure that their promotions are approved by an FCA authorized entity to remain compliant.
The FCA’s letter outlines the necessary steps for firms to adhere to the new regime and elaborates on the actions the regulator may take against non-compliant entities. Additionally, the guidelines include a section covering non-compliant crypto memes, which the regulator may classify as financial promotions.
The FCA has emphasized that failure to comply with these regulations could result in a breach of section 21 of the UK’s Financial Services and Markets Act 2000, a criminal offense punishable by up to two years of imprisonment, an unlimited fine, or both.
Furthermore, the regulator has issued a warning to intermediary businesses that support unregistered crypto asset firms, such as social media platforms, app stores, search engines, and payment companies. These businesses have been urged to be aware of the risks associated with facilitating illegal promotions targeting UK consumers.
In the warning letter, the FCA reminded UK businesses to carefully consider their obligations under the Proceeds of Crime Act 2002, as they may inadvertently become involved in money laundering offenses by supporting firms engaged in illegal financial promotions. This risk pertains to the fees generated by app stores, social media platforms, search engines, and domain name registrars hosting such promotions.
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Disclaimer: The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.
