UK’s Financial Conduct Authority says crypto firms are failing to satisfy new promotional rules
The U.K.’s Financial Conduct Authority (FCA) said on Oct. 25 that many crypto firms are failing to meet its new promotion requirements.
The relevant rules came into effect on Oct. 8. Those rules require companies to warn users that they could lose their entire investment by investing in some crypto products. The rules also prohibit companies from offering referral bonuses, among certain other requirements.
The FCA now says that it has identified three common shortcomings. First, it says that companies have made claims about the safety, security, and ease of use of cryptocurrency services without highlighting the risks of those services.
Second, it said that some companies have not made their warnings sufficiently visible, as some warnings use small fonts or hard-to-see colors and positioning.
Third, it said that some firms have failed to set out the risks related to specific products adequately.
FCA will take action against violators
The FCA said that it will take action against firms that do not meet requirements. The regulator noted that it has already imposed restrictions on one company: rebuildingsociety.com. That company was expected to partner with Binance to provide the exchange’s UK services, though Binance later stopped accepting UK customers.
To date, the regulator has issued 221 alerts to firms violating the new rules. Many of those alerts were issued immediately after the regulations came into effect. Though most concern little-known companies, some concern is leading crypto firms like HTX and KuCoin.
The new crypto marketing regime is exceptionally strict, as its rules allow the government to impose unlimited fines on companies and prison time on executives. The rules extend to companies that are based outside of the U.K. and merely serve U.K. customers.
Several notable crypto services have withdrawn from the U.K. in recent months, including PayPal, Bybit, Nicehash, and Luno, as the new rules were set to take effect.
