March 27, 2024
UK Financial Watchdog Issues Stern Warning to Crypto Firms Ignoring New Promotion Regulations
Policy & Regulation

UK Financial Watchdog Issues Stern Warning to Crypto Firms Ignoring New Promotion Regulations

The Financial Conduct Authority (FCA) of the United Kingdom issued a warning to cryptocurrency businesses on Thursday to comply with new financial promotion regulations, which the great majority of enterprises seem to be ignoring.

Only 24 out of more than 150 firms had responded to a survey the FCA sent out regarding the new rules, the regulator claimed in a letter made public by the FCA. The laws will significantly limit the dissemination of financial promotions from “unauthorized and unregistered crypto businesses” once they go into effect the following month.

“We are concerned by the poor engagement from many unregistered, overseas crypto asset firms who have U.K. customers on this important change,” the FCA wrote in its statement.

On October 8, cryptocurrency companies “must cease making illegal financial promotions to U.K. consumers,” the letter continued. The potential penalties for continuing such behaviour are “up to 2 years imprisonment, an unlimited fine, or both.”

The restrictions, which already apply to other financial products, specifically forbid unlicensed crypto firms from sending advertising to U.K. clients that encourage them to invest in crypto assets. The only material shared is “purely factual information,” along with directions for current customers on how to “transfer, withdraw, or sell their existing assets.”

Intentionally broad regulations include messages sent via social media and applications. Even crypto memes could violate the FCA’s promotion regulations, according to a different set of guidelines the regulator released in July.

Due to the challenges of adhering to such regulations, it was reported last week that the cryptocurrency exchange Bybit was considering leaving the United Kingdom. Ben Zhou, CEO of Bybit, stated right away that compliance remained the company’s “priority,” but that no final decision had been made regarding how the company would proceed in the area.

The FCA is also targeting companies that are close to those that are running non-compliant ads. This includes payment providers, search engines, app stores, and social media platforms, all of which could be held accountable for money laundering charges if connected to unregistered cryptocurrency businesses.

“If firms believe they are going to be in breach after the regime comes into force, they need to urgently consider their position,” the letter concluded.

Image: Wallpapers.com

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