Crypto companies have breached new UK promotion rules at least 221 times since they came into force on Oct. 8, the Financial Conduct Authority (FCA) said.
The most common breaches included firms failing to provide customers with adequate information on risks associated with promoted products, the risk warnings not being visible due to small fonts, and claims about the safety, security, or ease of using crypto without highlighting the risks involved, the FCA said.
Find out the 3 common issues we’ve identified with #cryptoasset financial promotions.
— Financial Conduct Authority (@TheFCA) October 25, 2023
The watchdog’s latest warning comes after it issued 146 alerts on breaches of the new rules just a day after the new regime went live.
FCA’s Tough Restrictions On Authorized Firms
The watchdog said it has taken action against one firm, rebuilding society.com, to restrict it from approving from approving crypto asset financial promotions.
Binance UK, which used the firm for its communications, subsequently suspended onboarding new U.K. users.
“We expect authorized firms approving the financial promotions of crypto asset firms to take their regulatory obligations seriously,” it said. “Where this is not happening, we will take action.’’
It added that it works with businesses, including social media platforms, app stores, search engines, and domain name registrars, to block illegal promotions. The watchdog also works with payments firms to limit U.K. consumer exposure to firms issuing illicit advertisements.
‘’These businesses should consider our issued alerts and play their part in protecting U.K. consumers,’’ the FCA added.
Under the new regime, firms wishing to promote crypto assets in the U.K. must, by law, be authorized or registered by the FCA or have their marketing approved by a trusted firm. Promotions must be transparent, fair, and not misleading, as well as clearly labeled with prominent risk warnings.
The new regime applies to all firms marketing crypto assets to U.K. consumers, regardless of whether the firm is based overseas or the technology used to promote the promotion.
Routes Crypto Firms Can Use For Promotions
There are various routes crypto asset firms can take to communicate crypto asset promotion lawfully under the new rules.
These include an authorized person sharing the promotion, an authorized person approving the promotion, a crypto firm registered under the Money Laundering Regulations (MLR) communicating the promotion, and the promotion complying with the conditions of an exemption in the Financial Promotion Order.
It is worth mentioning that FCA’s rules are designed to help people understand what they are purchasing and the risks involved. The watchdog has said that it will continually identify and act against firms illegally promoting crypto assets to U.K. consumers.
Further, the list will constantly be updated as the firm identifies platforms illegally communicating crypto asset promotions and failing to engage constructively.
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