The UK’s Financial Conduct Authority (FCA) has voiced its concern as numerous crypto asset promotions continue to flout regulations implemented on October 8, shedding light on widespread issues facing the industry. Despite stringent guidelines, companies promoting crypto assets often disregard vital regulations, raising alarm among financial watchdogs.
The FCA has pinpointed three significant problems in the marketing of cryptoassets. Firstly, promotions frequently emphasise the “safety,” “security,” and “ease” of crypto services, downplaying associated risks. Secondly, crucial risk warnings are often obscured by small fonts or non-prominent positioning, rendering them ineffective. Lastly, firms are failing to provide adequate information regarding the specific risks tied to the products they endorse.
Companies that approve financial promotions for crypto firms are expected to strictly adhere to regulatory guidelines. Failure to comply will result in stringent actions, including restrictions placed on the offending firms. The FCA has already taken measures against a firm that failed to meet the required standards in approving crypto asset promotions, imposing necessary restrictions.
The FCA’s efforts are not isolated; it collaborates with social media platforms, app stores, and search engines, urging them to remove or block illegal promotions. Additionally, payment firms limit UK consumer exposure to entities issuing unlawful promotions. These businesses are encouraged to heed the alerts issued by the FCA, actively participating in safeguarding UK consumers.
“We are also continuing to identify and act against firms that are illegally promoting cryptoassets to UK consumers. Since the regime went live, we have issued 221 alerts. This list will be continually updated as we identify firms which may be illegally communicating crypto asset promotions and are failing to engage with us constructively,” stated the FCA in an official statement. The first day after the regulations took effect saw the issuance of over 140 alerts.
However, the FCA emphasises that despite the new regulations, cryptoassets remain a high-risk and largely unregulated sector. Consumers are urged to exercise utmost caution and be prepared for the possibility of losing all their invested money.
Since October 8, companies intending to advertise crypto assets in the UK are legally obligated to obtain authorisation or registration from the FCA. According to FCA guidelines, such promotions must be transparent, equitable, and devoid of misleading information.
Promotions should feature conspicuous risk warnings and must not unduly encourage individuals to invest. This regulatory shift aligns crypto assets with other high-risk investment options. These rules apply to all firms targeting UK consumers, irrespective of their geographical location. Firms found non-compliant will face robust action, including the removal of illegal content.
