The United Kingdom’s Financial Conduct Authority (FCA) has reported 221 breaches of its new cryptocurrency marketing rules since they were implemented on October 8, 2023. The regulator expressed concerns that firms need to provide more risk warnings and information while making misleading claims about the safety and ease of crypto investments.
FCA reports numerous breaches
The FCA’s latest announcement follows a significant uptick in alerts it issued regarding breaches within the first 24 hours of the rules coming into effect, totaling 146 notifications. While some of these alerts targeted unlawful schemes promising high returns on crypto investments, the FCA also took action against them.
On October 10, the FCA took action against Rebuildingsociety, a firm partnered with Binance, by imposing restrictions on its marketing and communications to ensure submission with the new regulations. This move by the FCA subsequently led Binance to halt the onboarding of new users in the UK.
In a statement, the FCA highlighted the importance of authorized firms responsible for approving financial promotions for crypto asset firms taking their regulatory obligations seriously. The regulator warned that it would not hesitate to act if such obligations were unmet.
Collaborative efforts to curb Crypto promotions
The FCA is also collaborating with various stakeholders, including social media platforms, app stores, search engines, domain name registrars, and payment providers, to trim the promotion and flow of funds to banned crypto promotions.
Stringent regulations apply to all businesses
The new rules specify that only FCA-authorized or regulated firms can promote or approve cryptocurrency-related advertisements. These rules are applicable to all businesses, including those without a physical presence in the UK. Advertisements must prominently display risk warnings and must not incentivize crypto investments.
Additionally, certain common promotional techniques in overseas markets, such as referral bonuses and memes, are banned or restricted in the UK.
James Young, the Head of Compliance at Transak, commented on the FCA’s regulatory framework, stating that it poses significant challenges for businesses. However, he believes that this stringent approach will ultimately enhance consumer protection and potentially drive widespread adoption of cryptocurrencies.