FCA Issues 146 Crypto Alerts as New Regulations Take Effect
The Financial Conduct Authority (FCA) in the United Kingdom wasted no time in implementing its new crypto marketing regulations, issuing a staggering 146 alerts in just the first 24 hours after the rules came into effect. These new regulations require firms promoting crypto assets in the UK to either be authorized or registered with the FCA or have their marketing materials approved by an authorized entity.
The FCA’s move is part of a broader effort to protect UK consumers from illegal and misleading crypto asset promotions. The regulator has been vocal about the high-risk nature of crypto investments, emphasizing that consumers should be prepared for the possibility of losing all their invested funds.
Among the 146 entities named in the FCA’s warning list were major cryptocurrency exchanges, including Huobi (HTX) and KuCoin. These platforms were included in the list as they had not registered with the FCA and were operating without the required authorization. Both Huobi and KuCoin, however, clarified that they do not operate or market their services in the UK.
The new FCA rules demand that crypto asset promotions be transparent, fair, and free of misleading information. They must also include prominent risk warnings and should not incentivize individuals to invest inappropriately. These rules bring crypto assets in line with other high-risk investments.
Firms that wish to promote crypto assets in the UK now have four options to lawfully communicate their promotions:
- An authorized person communicates the promotion.
- An authorized person approves the promotion.
- A crypto firm registered under the Money Laundering Regulations (MLR) communicates the promotion.
- The promotion complies with the conditions of an exemption in the Financial Promotion Order.
The FCA has been actively preparing the industry for these changes since February, and it recently issued a letter urging crypto firms to assess their compliance readiness urgently.
In cases of non-compliance, the FCA is prepared to take robust actions to remove illegal content to safeguard consumers. These new regulations align with the FCA’s broader objectives for 2023/24, which include reducing and preventing harm, establishing and testing higher standards, and promoting competition and positive change within the financial industry.
Overall, the FCA’s proactive stance on crypto asset promotions is aimed at fostering a safer and more transparent environment for crypto investors while ensuring that businesses in this sector adhere to the regulatory framework.