UK Financial Conduct Authority Warns Crypto Firms To Face Large Penalties If False Promotions

Key Points:

• Crypto firms are being cautioned by the UK Financial Conduct Authority to abide by its updated rules for ads.
• Large fines, including up to two years in prison, might be imposed on businesses.
• Additionally, AML-compliant cryptoasset enterprises that promote crypto assets will be subject to FCA oversight and enforcement.

On Monday, the UK Financial Conduct Authority issued a warning to the cryptocurrency industry to prepare for a change in the law regarding advertising later in the year, threatening up to two years in prison for any violations by firm managers.

The UK Treasury announced last week that it would introduce secondary legislation this year that would permit cryptocurrency businesses that adhere to the financial watchdog’s anti-money laundering safeguards to run their own promotions until new crypto regulation is introduced, which is likely to happen in 2024.

“All cryptoasset firms marketing to UK consumers, including firms based overseas, will soon need to comply with the new UK financial promotions regime.”

The financial regulator stated that although the new cryptosystem is not yet completed, the regulations will be similar to those for other high-risk investments, requiring marketing to be transparent and equitable and giving clients a 24-hour cooling-off time to reconsider rash purchases.

“This regime will apply to all firms marketing cryptoassets to UK consumers regardless of whether the firm is based overseas or what technology is used to make the promotion.”

Currently, a company with full FCA authorization must authorize the advertisement.

The administration also announced that it would shorten the transitional period from six months to four months after secondary legislation has been established by parliament.

Additionally, AML-compliant cryptoasset enterprises that promote cryptoassets will be subject to the FCA’s supervision and enforcement authorities, which include the ability to order a business to take down its website.

The watchdog emphasized that customers should be ready to lose all of their money if they want to invest in cryptoassets and that these investments remain very risky.

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