Gabriel Shapiro, general counsel at Delphi Labs, warned that most crypto companies will struggle to comply with the UK Financial Conduct Authority’s (FCA) new regulations on financial promotions.
In a September 11 post on X (formerly Twitter), Shapiro noted that strict regulatory compliance may only be feasible for centralized exchanges and a select few established DeFi projects. However, he emphasized that even these entities may face challenges in meeting compliance requirements due to time constraints.
Shapiro continues marked the financial challenges that can come with compliance. He said each project could require at least $500,000 for legal advice and development. He pointed out that covering these costs could require a reallocation of resources from other areas.
While the crypto lawyer admitted that the regulations would help protect people who “invest in coins,” he pointed out that the laws were incompatible with the industry because “most technology is peer-to-peer” and “many participants in the sector that are not’. intermediaries or custodians.”
The new regulation
The UK FCA implemented a revised financial promotion regime due to come into effect in October that would impact the marketing of cryptocurrency assets. These updated regulations impose strict guidelines on how crypto companies can promote their services to UK residents. One consequence of these regulations in particular is the banning of crypto referral programs, among other restrictions.
Meanwhile, the law has created several legitimate avenues for companies to market crypto assets to consumers in the United Kingdom. These routes include communication by an authorized person, communication by an unauthorized person with the approval of an authorized person, or contact by a company registered under the FCA Money Laundering Regulations (MLRs).
These new regulations have forced several crypto companies, including Luno and PayPal, to adopt a changed approach to their services in the country. Due to the upcoming legislation, the two companies would limit some of their services within the jurisdiction from October.
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