The Financial Conduct Authority’s (FCA) new crypto marketing and promotions regulations are now in effect and a Director at the UK watchdog revealed that a ‘significant’ number of companies may not meet the guidelines.
Lucy Castledine, Director of Consumer Investments, recently told Bloomberg that due to recent high-profile collapses in the crypto market last year was a catalyst for the new regulations whilst highlighting the number of overseas firms that have taken an interest in the UK crypto market over the last several years.
She told the new outlet: “Recent events such as the high-profile failure of several crypto-asset firms further highlight the riskiness of these products.
“There are a significant number of firms who we don’t think we’ll be able to meet the new requirements. There are a number of fairly large overseas crypto exchanges that are targeting the UK that have failed to engage with us.”
The UK financial regulator has ramped up efforts to regulate the crypto market following on from a year of extreme turbulence, with a major focus on consumer protection.
The new promotion and marketing crypto rules are designed to be “clear, fair and not misleading” and are enforced to companies seeking to enter the UK no matter where they are based globally.
The FCA is also introducing a 24 hour cooling off period for consumers and investors to provide them with greater clarity on whether or not to invest in any form of cryptocurrency.
Castledine further revealed that the FCA will work with regulators across the world in tracing 100,000 websites each day for any breaches of the new guidelines. The UK regulator has cautioned that up to two years imprisonment is a potential penalty for any offending companies and/or individuals.
Furthermore, the FCA has also made modifications for companies to be better prepared, as crypto firms who have registered under the Money Laundering Regulations (MLR) act can submit an application for modification when it pertains to the new regulations.
Companies who apply for modifications will be given until 8 January, 2024.
While new crypto regulations can be looked upon as a positive sign for the betterment of the market and for greater consumer protection, many have cautioned that overly stringent regulations may hinder innovation.
Nevertheless, Su Carpenter, Director of Operations at CryptoUK, previously emphasised to Payment Expert that the new FCA promotion and marketing rules are ‘critical’ in the growth of user adoption in the market.
She stated: “We do ask that any regulation also empowers consumers to invest and transact in crypto assets safely and confidently, whilst keeping in mind that there are multiple additional use cases for this technology outside of just investments.”