UK's FCA Issues "Final Warning" On New Crypto Marketing Rules, Laments Industry's ''Lack of Engagement''

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The UK’s Financial Conduct Authority (FCA) gave crypto firms a ”final warning” about incoming rules on promoting products and said it’s concerned about the industry’s ”lack of engagement” with authorities over the issue.

The new rules, which govern how crypto firms and intermediaries promote products in the UK, come into effect on Oct. 8. The FCA warned that firms that continue to promote crypto assets to UK consumers without necessary approvals face ”up to 2 years imprisonment, an unlimited fine, or both,”

“We are concerned by the poor engagement from many unregistered, overseas crypto asset firms who have UK customers on this important change,” it said in a statement. “Many of these firms have refused to engage with the FCA despite our best efforts. For instance, out of over 150 firms surveyed, only 24 responded, indicating a troubling lack of interest in complying with the new regime.”

From 8 October 2023, #crypto firms must market to UK consumers clearly, fairly and honestly, and must also provide risk warnings people understand. https://t.co/cqxj1jVtAT

— Financial Conduct Authority (@TheFCA) September 7, 2023

FCA Says Lack Of Industry Engagement Raises ”Serious Concerns”

It said the lack of engagement raises serious concerns about the industry’s readiness to adhere to the new regulations and warned that non-compliant firms would be placed on a warning list. In severe cases, they may face criminal prosecutions, it added.

Social media platforms, app stores, and payment firms also need to play their part in ensuring that illegal financial promotions are not communicated to UK consumers by unregistered crypto asset firms, it said. Social media platforms and search engines enable ads to be targeted at UK consumers, it added.

“We remind all businesses supporting unregistered crypto asset firms that they should carefully consider their obligations under the Proceeds of Crime Act 2002,” it said. ”We expect these firms to play their part in ensuring that illegal financial promotions are not communicated to UK consumers by unregistered crypto asset firms.”

Once the financial promotion regime takes effect, unauthorized and unregistered crypto businesses will only be able to communicate financial promotions that have been approved by an authorized entity or are within the scope of certain narrow exemptions in the Financial Promotion Order.

The FCA said the definition of a financial promotion is intentionally broad and encompasses communications made through websites or apps The majority, if not all, crypto asset firms catering to UK consumers will fall within the scope of the regulations, it said. The new regulations require firms to market products “clearly, fairly and honestly, and must also provide risk warnings people understand.”

The FCA also encouraged consumers to be vigilant, advising them to check the warning List, which will be continually updated once the regime takes effect, to stay informed about compliant firms.