The UK’s Financial Conduct Authority (FCA) has sent a message to crypto and digital asset firms operating in the UK that if they are found to be in breach of its new financial promotion regime, they will face up to two years in prison.
This comes after the UK government outlined plans in January 2022 to bring crypto businesses within the FCA’s remit who are marketing their services to UK consumers, based domestically and internationally.
Furthermore, the government also proposed a legislation that will warn customers of inaccurate promotions of crypto firms to the market and are subject to the same rules other financial services must follow under the FCA’s authority.
Four routes of communication operations crypto firms must adhere by are: that promotion is communicated by an FCA authorised person, the promotion is made an unauthorised person by approved by the FCA’s authorised person, the promotion is communicated by a cryptoasset business registered under the MLRs, and the promotion complies with conditions exempt from the Financial Promotion Order.
“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,” said a FCA briefing.
Promotions that are not made using one of these routes will be in breach of section 21 of the Financial Services and Markets Act 2000 (FSMA), which is viewed as a criminal offence and guilty cryptoasset businesses could face up to two years imprisonment.
“Cryptoassets remain high risk. We have repeatedly warned that consumers should be prepared to lose all of their money if they buy cryptoassets,” continued the FCA briefing.
“Recent events such as the high-profile failure of several cryptoasset firms further highlight the riskiness of these products. There is unlikely to be any compensation under the Financial Services Compensation Scheme for consumers who lose money.”