The Financial Conduct Authority (FCA) of the United Kingdom has issued a warning to cryptocurrency businesses. The regulator urges firms to adhere to new financial promotion regulations, which most businesses seem to be neglecting.
In a public letter released, FCA revealed that out of over 150 firms surveyed, only 24 have responded. These regulations, set to take effect next month, will significantly limit how financial promotions from “unauthorized and unregistered crypto businesses” can be conveyed.
“We are concerned by the poor engagement from many unregistered, overseas crypto asset firms who have U.K. customers on this important change,” wrote the FCA in its statement.
What will happen to non-compliance?
Starting on October 8, crypto firms are required to stop making unlawful financial promotions to UK consumers. Penalties for continuing such activities could involve “up to 2 years imprisonment, an unlimited fine, or both.”
The FCA’s rules specifically prohibit unauthorized crypto firms from sharing promotions that encourage UK customers to invest in cryptocurrencies. A rule that already applies to other financial products. Communications are restricted to providing “purely factual information”. Which also limits instructions to existing customers on how to “transfer, withdraw, or sell their existing assets.”
These regulations encompass communications made via apps and social media. A separate set of guidelines from the FCA indicated that crypto memes could potentially violate the agency’s promotion rules.
Recently, there were rumors that the crypto exchange Bybit was considering exiting the UK. The reason is due to the challenges of complying with these rules. Bybit’s CEO, Ben Zhou, clarified that compliance remains the company’s top priority. But no final decisions had been made regarding the company’s future in the region.
The FCA also intends to hold accountable firms associated with non-compliant advertisements, such as social media apps, search engines, app stores, and payment companies. These entities could face money laundering charges if connected with unregistered crypto firms.
The FCA’s letter concluded by advising firms that believe they will breach the regulations to urgently evaluate their situation.
