The Financial Conduct Authority (FCA) has stated that several crypto promoting firms in the United Kingdom have violated the crypto marketing rules. Since its implementation, there have been at least 221 breaches of the law.
Quick Take:
- The FCA reports 221 violations of the new promo laws in the UK.
- Most illegitimate businesses have failed to clear the requirements of providing enough risk information.
- As per FCA, crypto firms should have a clear risk warning and should incentivize crypto investments.
The UK Financial Conduct Authority released a new statement on October 25 to comment on the performance of crypto firms regarding the latest crypto promotion laws. Nonetheless, these laws came into effect on October 8, 2023.
As per the regulator, many crypto firms in the UK are failing to comply with the rules. They are unable to provide enough visible risk warnings or adequate risk information to the users coming on their platforms.
However, these firms are making claims about the security and safety of their platform without highlighting the risks associated with the sector. In a previous update on October 10, the FCA stated that it had issued a total of 146 breach alerts for the new rules within 24 hours.
Moreover, most of these violations come from illegitimate high-yield return schemes and Ponzi projects. But many legitimate businesses have also been reported by the FCA.
FCA Keeps a Strict Eye Out on Crypto Firms
The authority claims that the risk warnings on many platforms were in small fonts or hard-to-read coloring. Thus, there was little to no information on the risks of many products that were promoted online.
The FCA added,
“We expect authorized firms approving the financial promotions of crypto asset firms to take their regulatory obligations seriously. Where this is not happening, we will take action and have already placed restrictions on an authorized firm to restrict it from approving crypto asset financial promotions.”
On October 10, the regulator added that it has imposed restrictions on RebuildingSociety. The platform was now unable to approve financial promos for Binance and some other crypto firms. As a result, Binance stopped taking new users from the UK.
As per the new rules by the watchdog, crypto ads and promotions can only be approved by the FCA-authorized firms. The law applies to all businesses, including those which do not have a UK presence.
Moreover, all of these promotions must have a clear and prominent risk warning. They should not incentivize investing in cryptocurrencies. Other forms of promotion, like referral bonuses and memes, are also banned in the UK.
As per the FCA,
“Even with the new marketing rules, crypto assets still remain high risk and largely unregulated. If something goes wrong, it is unlikely people will have access to consumer protections, so should be prepared to lose all their money.”
Many crypto businesses believe that these restrictions and requirements from the FCA are harsh. However, consumer protection has remained a tricky situation in the crypto industry, and it is very important for businesses to ensure maximum regulatory compliance, as it would encourage more growth in the sector.
