Since the Financial Conduct Authority (FCA) implemented its new crypto marketing and promotions rules, it has flagged some key concerns of which companies are not abiding by.
The UK’s financial regulator has currently identified 221 alerts of illegal activity since the new regulations were enacted, as the FCA stated it will be communicating with cryptoasset promotions who are failing to engage with them.
Three common issues and concerns the FCA raised when it comes to companies not complying with the new regulations are:
- Promotions making claims about the ‘safety’, ‘security’ or ease of using cryptoasset services without highlighting the risks involved
- Risk warnings not being visible enough due to small fonts, hard-to-read colouring or non-prominent positioning
- Firms are failing to provide customers with adequate information on the risks associated with specific products being promoted
An FCA statement read: “We expect authorised firms approving the financial promotions of cryptoasset firms to take their regulatory obligations seriously. Where this is not happening, we will take action and have already placed restrictions on an authorised firm to restrict it from approving cryptoasset financial promotions.
“We are working with businesses including social media platforms, app stores, search engines and domain name registrars to remove or block illegal promotions. We are also working with payments firms to limit UK consumer exposure to firms issuing illegal promotions.
“These businesses should consider the alerts we have issued and play their part in protecting UK consumers.”
The new FCA crypto rules were introduced as a way to protect customers from the volatility of the crypto market, which underwent several major collapses last year.
The financial watchdog has also ramped up its efforts to heavily regulate consumer-facing products, such as crypto, and provide more clarity on the risks involved with such products.
Lucy Castledine, Director of Consumer Investments at the FCA, told Bloomberg that she expects a “significant” number of companies who will not be able to meet the new promotion and marketing guidelines.
She said: “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 FCA also sent a warning to crypto asset companies at the beginning of the year stating that failure to comply with its overhaul of crypto regulations could lead to up to two years in prison.