The UK Financial Conduct Authority (FCA) said on October 25 that many crypto companies are failing to meet the new promotional requirements.
The relevant rules came into force on October 8. Those rules require companies to warn users that they could lose their entire investment by investing in some crypto products. The rules also prohibit companies from offering referral bonuses, in addition to certain other requirements.
The FCA now says it has identified three common failings. First, it says companies have made claims about the safety, security and ease of use of cryptocurrency services without highlighting the risks of those services.
Second, it said some companies have not made their warnings sufficiently visible, as some warnings use small fonts or difficult-to-see colors and positioning.
Third, the report states that some companies have failed to adequately identify the risks associated with specific products.
FCA will take action against violators
The FCA said it will take action against companies that fail to comply. The regulator noted that it has already imposed restrictions on one company: constructioningsociety.com. That company was expected to partner with Binance to provide the exchange’s UK services, although Binance later stopped accepting UK customers.
So far, the regulator has issued 221 warnings to companies that violate the new rules. Many of these warnings were issued immediately after the regulations came into effect. While most involve little-known companies, there is some concern with leading crypto companies like HTX and KuCoin.
The new crypto marketing regime is exceptionally strict, as the rules allow the government to impose unlimited fines on companies and prison sentences on executives. The rules extend to companies based outside Britain and serving only British customers.
Several notable crypto services have pulled out of Britain in recent months, including PayPal, Bybit, Nicehash and Luno, as the new rules were due to come into effect.