Key takeaways:
- UK Financial Regulator Issues Criminal Charges Warning to Crypto Firms for Unapproved Ads
- The new UK financial promotions framework will soon require compliance with all cryptocurrency firms, even those headquartered abroad, the FCA says.
According to a recent announcement from the Financial Conduct Authority (FCA), businesses that choose not to use one of the four approved methods of cryptocurrency promotion risk receiving a criminal sentence of “up to two years jail.”
In accordance with the Money Laundering, Terrorist Financing, and Transfer of Funds (Information on the Payer) Regulations of 2017 (the “MLRs”), the policy document outlines the commitment to add a specific exemption to the Financial Promotion Order for crypto asset businesses registered with the FCA.
The new UK financial, promotional framework will soon require compliance from all cryptoasset businesses, including those with overseas offices and those marketing to UK customers.
Firms need to start getting ready for this regime right away. If a company violates these rules, we will take severe action.
For the crypto industry, new advertising regulations were put down last year. Last Monday, the Treasury announced that money laundering-registered cryptocurrency companies, not just licensed to operate conventional financial companies, will be permitted to implement new campaigns.
Just a few days ago, Majesty’s Treasury released its much anticipated consultation paper on possible cryptocurrency law in the UK. The lengthy 82-page research investigates a number of topics, such as the problems with algorithmic stablecoins, Non-Fungible Tokens (NFTs), and Initial Coin Offerings (ICOs).
The FCA also reaffirmed its view that any cryptocurrency assets are “high risk,” citing the failure of numerous centralised exchanges in late 2022 as proof of this and warning investors to be ready to lose all of their invested money.
The company’s criteria will be similar to those of other businesses that provide high-risk investments, including specific warnings and a “24-hour cooling off time” for clients to reconsider purchases, even though the new regulations have not yet been adopted.
The controversy surrounding ad campaigns is not particularly new; in June 2021, promotional campaigns for Luno, a consumer-focused cryptocurrency trading app that is a division of the Digital Currency Group (DCG), were prohibited.
