UK Financial Conduct Authority Warns Crypto Companies
The UK financial regulator, the Financial Conduct Authority (FCA) has warned crypto firms that they will be treated the same as other high-risk investments with regards to marketing to UK consumers.
The full article from the FCA can be found here
The FCA states that “All cryptoasset firms marketing to UK consumers, including firms based overseas, will soon need to comply with the new UK financial promotions regime. Firms must start preparing now for this regime. We will take robust action against firms breaching these requirements.”
Subject to Parliamentary approval, when the regime comes into force there will be four routes to communicate crypto asset promotions to UK consumers.
The promotion is communicated by an FCA authorized person.
The promotion is made by an unauthorized person but approved by an FCA authorized person. Legislation is currently making its way through Parliament which, if made, would introduce a regulatory gateway that authorized firms will need to pass through in order to approve financial promotions for unauthorized persons.
The promotion is communicated by a crypto asset business registered under the MLRs with the FCA.
The promotion otherwise complies with the conditions of an exemption in the Financial Promotion Order.
Promotions that do not follow one of these routes will be in breach of section 21 of the Financial Services and Markets Act 2000 (FSMA). This is a criminal offence, punishable by up to 2 years imprisonment.
Crypto firms will be required to specify risk warnings, 24-hour cooling off periods, in addition to ensuring that their promotions are clear, fair and not misleading.
Companies that are in breach could have their websites taken down, public warnings issued and other enforcement action.
Crypto asset companies that are marketing to UK consumers will need to register with the FCA if they provide one or more services described in Regulation 14A as outlined below.
Further details as to when a firm needs to register is highlighted below.
Furthermore, any person who is an officer, manager and beneficial owner of a crypto asset business applicable to this scenario, will also be subject to the fit and proper requirements under Regulation 58A as defined below.
