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The Financial Conduct Authority (FCA), the regulatory authority overseeing financial markets in the United Kingdom, has reiterated its concerns about the lack of cooperation from cryptocurrency firms that will soon be subject to new advertising regulations, warning of potential severe consequences for noncompliance.
In a letter dated September 21, the FCA issued a final warning to companies promoting crypto assets to UK consumers. The four-page letter initially detailed the FCA’s efforts to engage with crypto firms and assist them in adhering to the rules announced on June 8.
To facilitate compliance, the FCA extended the deadline for compliance from October 8 to January 8, 2024, citing the need for additional technical development and the publication of comprehensive best practice guidelines. However, the letter highlighted that “many unregistered, overseas cryptoasset firms” had not engaged with the FCA despite its outreach efforts, with only 24 out of 150 surveyed firms responding.
Compliance with the new regulatory regime will necessitate proactive measures:
“Once the regime is in force, unauthorised and unregistered crypto businesses will only be able to communicate financial promotions that have been approved by an authorised entity or fall within specific narrow exemptions in the Financial Promotion Order.”
Illegally promoting crypto assets will become a criminal offense, potentially resulting in promotions being blocked or removed from websites, social media, and apps. Intermediaries will also need to adhere to the new regime, aligning with Anti-Money Laundering and Counter-Terrorist Financing regulations and other regulatory measures.
The FCA retains the option to pursue financial penalties against violators, rendering contracts entered into with UK citizens unenforceable. Crypto asset firms unable to meet the new requirements are expected to take measures to prevent UK consumers from responding to their promotions.
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