UK Regulator Warns Crypto Firms of Strict Marketing Rules

The Financial Conduct Authority (FCA), the United Kingdom’s financial markets regulator, has once again voiced concern over the lack of engagement among crypto firms that will soon be subject to new marketing regulations.

It warned that the repercussions of noncompliance could be severe. In a letter dated September 21, the FCA issued a final warning to companies that market crypto assets to UK consumers.

The four-page letter first documented the efforts the agency had made to reach out to crypto firms and attempted to support them as they complied with regulations announced on June 8.

The FCA extended the compliance deadline from October 8, 2018 to January 8, 2024 “to introduce features that require greater technical development” and to publish extensive notes on best practices.

The letter stated that “many unregistered, overseas crypto asset firms have refused to engage with the FCA despite our best efforts.” As evidence, the letter stated that only 24 of 150 such businesses responded to a survey.

Compliance with the new regime will necessitate proactive measures from businesses:

“Once the regime is in force, unauthorised and unregistered crypto businesses will only be able to communicate financial promotions which have been approved by an authorised person or are within the scope of certain narrow exemptions in the Financial Promotion Order.”

Illegal promotion of crypto assets would be made illegal. Infringers would be placed on a warning list, and their promotions could be removed from websites, social media platforms, and mobile applications.

Those intermediaries would be expected to observe the new regime as well, in line with anti-money laundering and counter-terrorism financing regulations and other measures.

The FCA could seek monetary compensation from the violators, and any contracts they enter into with UK citizens would be void.

It is anticipated that crypto asset forms that cannot meet the new requirements will take steps to prevent UK consumers from responding to their promotions.