Many of the firms the FCA warned were breaching the new rules appear to be dubious high-yield return schemes, but legitimate firms have seen warnings too.
Crypto-promoting firms have breached the United Kingdom’s new crypto marketing rules at least 221 times since coming into force in early October, says the country’s financial regulator.
In an Oct. 25 statement, the U.K. Financial Conduct Authority (FCA) said since the Oct. 8 crypto promotion rules came into place, firms are still failing to provide visible enough risk warnings, provide adequate information about risks, and are making claims about the safety, security or ease of using crypto without highlighting the risks involved.
The FCA’s latest warning count comes after it said on Oct. 9 that it issued 146 alerts on breaches of the new rules in the 24 hours after the new regime went live.
Find out the 3 common issues we've identified with #cryptoasset financial promotions.
— Financial Conduct Authority (@TheFCA) October 25, 2023
Consumers should check the FCA Warning List before making any investment in #cryptohttps://t.co/CKn4cFxb11
While many of the FCA’s crypto-related alerts appear to be illegitimate schemes offering high-yield returns on crypto investments, the FCA has taken action against seemingly legitimate businesses as well.
An Oct. 10 statement noted it had placed restrictions on Rebuildingsociety — the FCA-regulated firm Binance partnered with to approve its marketing and communications to comply with the FCA’s new rules. Binance subsequently halted onboarding new U.K. users.
“We expect authorized firms approving the financial promotions of cryptoasset firms to take their regulatory obligations seriously,” the FCA statement said. “Where this is not happening, we will take action.”
It added it’s working with social media platforms, app stores, search engines, domain name registrars and payment providers to remove, block and stop the flow of funds to banned promotions.
Related: Largest DeFi protocol on Solana reportedly quits UK market, citing FCA rule
Under the new rules, crypto-related ads can only be promoted or approved by FCA-authorized or regulated firms and applies to all businesses — even those without a U.K. presence.
The promotions must have “prominent risk warnings” and not incentivize investing in crypto. Promotions typical in overseas markets such as referral bonuses and memes are banned and restricted in the U.K.
Transak compliance head James Young told Cointelegraph the FCA’s regime is “very challenging” for businesses to implement but believes the consumer protection will increase adoption “on an exponential scale.”
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