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FCA issues 146 alerts to non-compliant firms on first day of crypto asset promotion regime

FCA issues 146 alerts to non-compliant firms on first day of crypto asset promotion regime

The UK's Financial Conduct Authority has issued 146 alerts about crypto assets promotions on the first day that new rules came into force governing the marketing of crypto investments.

Since 8 October 2023, firms wishing to promote cryptoassets in the UK must, by law, be authorised or registered by the FCA, or have their marketing approved by an authorised firm. Under FCA rules, promotions must also be clear, fair and not misleading, labelled with prominent risk warnings and must not inappropriately incentivise people to invest.

The FCA has established a 'Warning List' to help consumers understand where firms' promotions may be breaking the law and to consider the promotion with the full information available.

With the deadline fast approaching last month, the watchdog fired off a warning to unregistered overseas cryptoasset firms, threatening fines and imprisonment for those who fail to comply with the new rules.

In a letter sent out to crypto firms marketing to UK customers headlined 'final warning', the watchdog bemoaned 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," wrote 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."

Comments: (1)

A Finextra member
A Finextra member 09 October, 2023, 14:48Be the first to give this comment the thumbs up 0 likes

At a recent web3 event there were some serious misgivings about the FCA approach and the cryptoasset promotion regime:

- any page on any website that mentions any cryptoasset can potentially run foul of the promotion regime
-  a cryptoasset trade by an organisation breaching the promotion regime may be treated as a financial crime, implicating all the organisation's service providers including accountants, lawyers etc
- the promotion regime goes far beyond any other jurisdiction's crypto regulations such as MiCA in Europe and may drive crypto business away from the UK

These are just points I heard from lawyers in the room, so check their accuracy, but there was a definite downbeat mood, nervousness and some bewilderment with a regulatory regime that is at odds with the UK government's vision for the UK to be a global hub for cryptoasset technology and investment.