According to the U.K. Financial Conduct Authority (FCA), crypto-promoting firms have violated the country’s new crypto marketing rules at least 221 times since they came into effect in early October. The FCA stated in an October 25th announcement that these firms continue to fail in providing visible risk warnings, adequate information about risks, and in highlighting the risks associated with the safety, security, or ease of using cryptocurrencies. This recent count of warnings follows the FCA’s release on October 9th, stating that it had issued 146 alerts within 24 hours after the new regulations were implemented.
While many of the FCA’s crypto-related alerts seem to involve illegitimate schemes offering high-yield returns on crypto investments, the regulator has also taken action against seemingly legitimate businesses. On October 10th, the FCA placed restrictions on Rebuildingsociety, a firm regulated by the FCA and partnered with Binance, to ensure compliance with the new crypto marketing rules. As a result, Binance temporarily suspended the onboarding of new users from the U.K. The FCA emphasized the importance of authorized firms taking their regulatory obligations seriously and warned that it would take action when necessary.
In its effort to enforce compliance, the FCA is collaborating with various entities including social media platforms, app stores, search engines, domain name registrars, and payment providers. The goal is to remove, block, and prevent funds from flowing into banned crypto promotions. These actions demonstrate the FCA’s commitment to protecting consumers and maintaining market integrity in the crypto space.
The new rules governing crypto-related advertisements require that such ads can only be promoted or approved by FCA-authorized or regulated firms. These rules apply to all businesses, even those without a presence in the U.K. Additionally, the promotions must prominently display risk warnings and cannot incentivize investments in cryptocurrencies. Referral bonuses and memes, commonly used in overseas markets, are banned or restricted in the U.K.
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While the implementation of the FCA’s regime may be challenging for businesses, James Young, the compliance head of Transak, believes that it will ultimately increase consumer protection and foster the adoption of cryptocurrencies on a larger scale.
The FCA’s actions reflect its commitment to addressing the risks associated with the rapidly evolving crypto market. By monitoring and enforcing compliance with the new marketing rules, the regulator aims to protect investors and ensure that they receive accurate and adequate information about the potential risks involved in investing in cryptocurrencies.
It is important for investors to remain cautious and conduct thorough research before engaging in any crypto-related activities. Checking the FCA Warning List, which provides information on individuals, companies, and unregulated investment schemes that operate without the necessary authorization, is a crucial step in safeguarding against potential scams or fraudulent activities.
As the crypto market continues to grow and evolve, regulators worldwide, like the FCA, will play a vital role in establishing a framework that promotes investor protection and maintains the integrity of the market. Both businesses and individuals must adapt to and comply with these regulations to ensure the long-term sustainability and stability of the crypto industry.
