The UK’s Financial Conduct Authority (FCA) has issued its latest warning to cryptocurrency companies over the upcoming financial promotion regime starting in October.
In a letter dated September 21, the financial regulator stated that all companies marketing crypto assets to UK consumers, including foreign companies, must comply with these regulations.
The Financial Promotion Regime outlines several guidelines for crypto companies before promoting their products in the region. The FCA had pledged to strictly enforce these regulations and threatened that violators could be punished with two years in prison, an unlimited fine, or both.
The supervisor said:
“This regime is important for reducing and preventing harm to consumers by investing in crypto assets that do not match their risk appetite. It is up to consumers to decide whether to purchase crypto, but they should do so based on honest and accurate information that helps them make effective investment decisions.”
The FCA explained that crypto was added to the regime because it is an inherently ‘high-risk investment’.
CryptoSlate reported that cryptocurrency companies could struggle to comply with financial promotion regulations. Gabriel Shapiro, general counsel of Delphi Labs, stated that a crypto project could spend more than $500,000 to ensure it complies with the laws.
Poor involvement of foreign companies
Meanwhile, the FCA decried the poor engagement it received from unregistered, foreign cryptocurrency companies on the upcoming regulations.
According to the letter, many foreign companies refused to engage with the financial watchdog despite its efforts to ensure compliance with the upcoming regulations. According to FCA, only 24 companies responded to a survey sent to more than 150 companies.
The FCA wrote:
“This lack of commitment raises serious concerns about the willingness of unregistered companies to comply with the new regime.”
Alerts social media platforms
The FCA warned that intermediaries, including social media platforms and search engines, must ensure that unregistered crypto asset companies do not communicate illegal financial promotions to UK consumers through their platforms.
According to the regulator, the recently adopted Online Safety Bill (OSB) imposes a duty on these companies to limit the risks of the presence and distribution of illegal content on their sites, including illegal financial promotions.
On September 19, OSB passed the final parliamentary reading and is ready to become law, despite opposition from several technology companies.
The post UK Financial Conduct Authority issues ‘final warning’ on upcoming marketing and disclosure rules first appeared on CryptoSlate.