The Financial Conduct Authority (FCA) of the United Kingdom has issued a stringent warning to crypto asset firms operating without registration, emphasizing their apparent reluctance to align with the forthcoming financial promotions’ regime. The regulatory authority has raised substantial concerns, especially about international crypto firms serving UK clients, who seem unwilling to liaise with the FCA.
Despite extensive outreach, only 24 out of over 150 firms responded to an FCA survey, indicating a concerning lack of engagement and raising doubts about the preparedness of these firms to conform to the upcoming regulations. As a result, every crypto asset firm, including those operating from abroad, aiming to serve UK consumers, must comply with the UK financial promotions’ regime by October 8.
The impending regulations will cover crypto promotions disseminated through various media channels, such as websites, social media, and online advertisements. To achieve compliance, firms not registered must obtain approval for their promotions from an individual authorized by the FCA. The FCA has provided a detailed guide on compliance and the potential repercussions for non-adherence.
Remarkably, the guidelines also address non-compliant crypto memes, which the regulator could classify as financial promotions. Non-compliance could lead to violations of section 21 of the Financial Services and Markets Act 2000, with stringent penalties including up to two years of imprisonment, unlimited fines, or both.
The FCA has also delineated explicit expectations for entities that assist non-registered crypto assets firms, such as social media platforms, app stores, search engines, and payment companies. These entities are encouraged to comprehend the risks associated with endorsing illegal promotions for UK consumers. The FCA underscored the necessity of compliance with the Proceeds of Crime Act 2002, cautioning that entities aiding unregistered firms could be implicated in money laundering offenses under POCA.
The warning from the FCA is a pivotal alert for businesses in the UK to scrupulously evaluate their legal responsibilities and the inherent risks of non-compliance. The FCA continues its vigilant oversight to ensure the burgeoning crypto sector adheres to legal norms, safeguarding consumers from unlawful financial promotions and upholding the financial market’s integrity in the UK.