Global: FCA Issues 146 Alerts to Non-Compliant Firms on First Day of New Crypto Asset Promotion Rules

The Financial Conduct Authority (FCA) in the UK wasted no time in taking action as it issued a total of 146 alerts regarding the promotion of crypto assets on the very first day that new regulations governing crypto investment marketing came into effect.

Starting from October 8, 2023, any firms wishing to promote cryptoassets in the UK must comply with the new law, which mandates that they must be authorized or registered by the FCA or have their marketing materials approved by an authorized firm. Furthermore, these promotions must adhere to FCA guidelines, ensuring that they are transparent, equitable, not deceptive, prominently marked with risk warnings, and do not inappropriately incentivize individuals to invest.

To assist consumers in identifying promotions that may be in violation of the law, the FCA has introduced a ‘Warning List,’ which provides valuable information to help consumers make informed decisions.

The FCA had previously issued a warning to unregistered overseas cryptoasset firms, clearly stating the potential fines and imprisonment that could result from non-compliance with the new regulations. In a letter addressed to crypto firms marketing to UK customers and titled ‘final warning,’ the FCA expressed its concerns about the inadequate response from overseas companies.

The FCA’s letter emphasized, “We are concerned by the poor engagement from many unregistered, overseas cryptoasset firms who have UK customers on this important change. 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.”

The regulator sternly warned that firms failing to engage would be in violation of section 21 of the Financial Services and Markets Act 2000. The consequences for such a breach include the possibility of facing up to 2 years in prison, an unlimited fine, or both.

The FCA affirmed its commitment to taking action against firms found to be illegally promoting their services to UK consumers, which may include placing them on the Warning List and taking measures to remove or block any illegal financial promotions, such as websites, social media accounts, and apps.