The UK’s Financial Supervisory Authority, the FCA, has issued a new warning for crypto companies. Heavy sanctions await companies that do not comply with the new regulations that will be valid as of October 8. Details are as follows…
Strict regulatory warning from the UK to crypto companies
The UK’s Financial Supervisory Authority (FCA) is disturbed by the “indifference” shown by unregistered crypto companies regarding upcoming financial regulations. The latest survey by the FCA found that just 24 firms out of more than 150 responded. Foreign crypto businesses, especially those serving UK customers, stand out in this lack of response.
“This lack of interest shows that we have serious concerns about the preparedness of unregistered companies to comply with the new regulation,” the FCA said in a letter published on Thursday. From October 8, all cryptocurrency firms marketing to British consumers must comply with the UK’s financial promotion standards.
What do the new regulations cover?
The new regulations cover coin/token promotions through various media, including websites, social media and advertisements. To comply with these rules, promotions of unregistered crypto firms must be approved by someone authorized by the FCA.
The FCA’s guidance explains the steps required for compliance. It also specifies possible actions against non-compliant entities. The guide also includes a section on incompatible coin/token memes as financial promotions.
Those who neglect these rules will face severe consequences. In particular, they may breach section 21 of the UK’s Financial Services and Markets Act. Such violations will result in a maximum of two years in prison, an unlimited fine, or both.
Warnings for brokers
Meanwhile, the FCA’s warning doesn’t just cover crypto firms. Businesses supporting unregistered coins/tokens also received warnings. In addition, social networks, application stores, search engines and payment businesses are also included in this warning. Brokers need to recognize the dangers of endorsing companies that target UK consumers with illegal promotions.
Additionally, the FCA’s letter highlights the obligations of UK businesses under the Proceeds of Crime Act 2002. “We are concerned that businesses supporting unregistered crypto asset firms may be at risk of committing money laundering offenses under POCA,” the regulator said. Intermediaries may be unknowingly dealing with the proceeds of crime through fees earned from hosting illegal promotions.
FCA offers four ‘legal ways’ crypto companies can follow when it comes to marketing
The FCA has also set out four legal guidelines that must be followed when advertising cryptocurrency. These methods include promotions such as website, social media posts and advertising. In summary, the details compiled from the legal text are as follows:
- The second way involves transmitting the promotion by an unauthorized person but having it approved by an authorized person. This ‘authorized person’ can be any organization or individual authorized to carry out a regulated activity under the Financial Services and Markets Act (FSMA) 2000
- The third way involves delivering the promotion through a crypto firm registered with the UK money laundering regulation. Finally, the fourth path requires the crypto firm to apply the exemption provided by the FSMA’s Financial Promotion Order.
- These four legal remedies aim to address crypto companies’ regulatory challenges. This step by the FCA is considered as an effort to bring more transparency and trust to the sector, at a time when regulations in the crypto sector are increasing. As Kriptokoin.com, we included in this article the warning text that the country prepared for crypto users at the beginning of the month.
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