The British Financial Conduct Authority (FCA) has taken an important step in regulating the cryptocurrency space by expanding its jurisdiction to include the promotion of crypto assets. This development comes after the FCA launched its regulatory oversight on 8 October 2023 to ensure firms comply with new regulations to provide accurate information and risk warnings to consumers. Here are the details of the Bitcoin and altcoin announcement…
FCA issued a cryptocurrency warning
The FCA’s announcement highlights three common issues identified with cryptocurrency financial promotions since the new regime came into force:
- Misleading Claims: Many promotions make claims about ‘security’, ‘safety’ or the ease of using crypto asset services without sufficiently emphasizing the risks involved.
- Insufficient Risk Warnings: Risk warnings are often not prominently featured or are left behind due to small fonts and hard-to-read color schemes.
- Lack of Information: Companies do not provide customers with adequate information about the risks associated with certain products promoted.
FCA; It has made it clear that authorized firms responsible for approving the financial promotion of Bitcoin and altcoins, i.e. cryptocurrency firms, must take their regulatory obligations seriously. Actions have already been taken, including the imposition of restrictions on an authorized company that does not comply with these obligations.
FCA cooperates with many organizations
To further strengthen compliance and protect consumers, the FCA works with a range of organizations, including social media platforms, app stores, search engines and domain registrars, to ensure that illegal promotions remain or are blocked. Payments firms are also working with the FCA to limit UK consumers’ exposure to companies running illegal promotions. These businesses are expected to heed the warnings issued by the FCA and play their part in protecting UK consumers.
The FCA is determined to continue to identify and take action against firms that illegally promote crypto assets to UK consumers. A total of 221 warnings have been issued since the new regime was implemented. This list is constantly updated as the FCA identifies firms that illegally promote crypto assets and fail to cooperate with regulators. Consumers are strongly advised to consult the FCA’s Warning List before making any investments in crypto assets. This list is a valuable resource for understanding whether a company’s promotions violate the law. It also allows consumers to make informed decisions.
What are the legitimate ways?
However, it is important to note that even with these new marketing rules in place, crypto assets remain high risk and largely unregulated. Consumer protections may not be ready in case of problems. Therefore, investors should be prepared for the possibility of losing their entire investment. cryptokoin.com As we have reported, since October 8, 2023, companies wishing to promote crypto assets in the UK must, by law, be authorized or registered by the FCA or have their marketing approved by an authorized firm. The FCA’s rules require promotions to be clear, fair and not misleading.
The FCA’s rules aim to ensure that consumers understand what they are investing in and the risks involved. The UK government has taken legal steps to include promotions of certain crypto assets into its financial promotion regime. Cryptoasset firms now have four legitimate ways to communicate their promotions:
- An authorized person delivers the promotion.
- An authorized person approves the promotion.
- A crypto firm registered under the Money Laundering Regulations (MLR) delivers the promotion.
- The promotion complies with the exemption conditions in the Financial Promotion Order.
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