The UK’s Financial Conduct Authority (FCA) has emphasized the significance of compliance for crypto asset enterprises targeting UK users in a statement. The FCA, which will begin enforcing new restrictions in October 2023, throws businesses a lifeline by giving them “more time to implement certain changes.”
According to the FCA’s latest statement on September 7, crypto firms operating in the UK may have until January 8, 2024, to address specific technical issues concerning the financial promotions regime, but only if granted approval. These new rules, introduced by the financial watchdog back in June, aim to rein in aggressive marketing tactics by crypto firms. They require companies to ensure that their advertisements are “clear, fair, and not misleading” or potentially face criminal charges.
Crypto firms must market to UK consumers clearly, fairly and honestly. And they must provide risk warnings people understand. As a proportionate regulator, we’re giving firms that apply a little more time to get the other reforms requiring technology and business change right
Lucy Castledine, FCA’s director of consumer investments director.
The FCA’s regulatory purview extends to various promotional channels, including “websites, mobile apps, social media posts, and online advertising,” as long as these have the potential to influence the UK audience. This oversight is not restricted to firms based within the country. The FCA even hinted at the possibility of taking “robust action” against non-compliant companies, including adding them to a warning list and requesting the removal of social media accounts and websites.
This regulatory leniency comes as a response to crypto firms that have seemingly struggled to fully grasp the intricacies of the rules, coupled with the significant changes required for compliance. Only those firms that receive approval will be granted the extended grace period until January 8, 2024, while others must meet the initial deadline of October 8, 2023.
“We understand the challenges firms have faced in preparing for the financial promotions regime. This will be the first conduct regime for the sector and represents a fundamental change to how cryptoasset activities are regulated in the UK,” the FCA noted.
In addition to aligning with the FCA’s marketing regime, crypto companies must also register with the regulator to engage in “crypto asset activities” within the United Kingdom. At the time of writing, the FCA has 42 registered crypto firms in compliance with its requirements.
As the crypto industry continues to evolve, the FCA’s measured approach seeks to balance regulatory enforcement with industry adaptation, offering crypto firms a little more time to get their operations in order while emphasizing the importance of clear and honest communication with consumers.