FCA bemoans lax response to new crypto promotion rules

The UK's Financial Conduct Authority has fired off a warning to unregistered overseas cryptoasset firms, threatening fines and imprisonment for those who fail to comply with new rules for financial promotions.

In June, the regulator set out a series of tough new rules for the marketing of crypto assets by companies - wherever they are based globally. Under the new regime, all marketing must be ‘clear, fair and not misleading’, labelled with prominent risk warnings and must not inappropriately incentivise people to invest - for instance through "refer a friend" bonuses. In a letter sent out to crypto firms marketing to UK customers headlined ’final warning’, the watchdog bemoans the lax response from overseas companies. "We are concerned by the poor engagement from many unregistered, overseas cryptoasset firms who have UK customers on this important change," writes the FCA. "Many of these firms have refused to engage with the FCA despite our best efforts. For example, only 24 firms responded to a survey that was sent to over 150 firms." Firms that fail to engage will be in breach of section 21 of the Financial Services and Markets Act 2000, the regulator warns. "This would be a criminal offence punishable by up to 2 years imprisonment, an unlimited fine, or both," states the FCA. "We will take action against firms illegally promoting to UK consumers including, but not limited to, placing firms on our Warning List and taking steps to remove or block any illegal financial promotions such as websites, social media accounts and apps." Firms will be allowed to communicate with their existing UK customers over the sale or transfer of their holdings, but must refrain from promoting any further investment activity. "We anticipate that such communications would be for a limited time only," the FCA says. "We believe it would be unsustainable for unregistered cryptoasset firms to maintain a longer-term relationship with UK consumers who they cannot legally communicate financial promotions to."

By on Tue, 26 Sep 2023 09:58:00 GMT
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