In a bid to “safeguard consumers,” the UK Financial Conduct Authority (FCA) has issued a warning regarding “common issues” observed in crypto asset promotions. With the implementation of a new marketing regime, the FCA has asserted its authority over crypto promotions in the UK.
FCA Unveils Alert List To Expose ‘Non-Compliant Crypto Entities’
The FCA has identified specific “areas of concern” since the new marketing rules were enacted. To address these issues, the financial watchdog has shared an updated “alert list” to highlight “non-compliant entities.”
The FCA’s statement emphasized that the change in legislation has brought crypto asset promotions under its remit, enabling it to supervise firms and “ensure consumers” receive accurate information and risk warnings.
Since October 8, the FCA has identified three common issues with crypto asset financial promotions. These include misleading claims about the safety and security of digital asset services without adequately highlighting associated risks, risk warnings not prominently displayed due to small fonts or hard-to-read color schemes, and firms failing to provide customers with sufficient information about the risks linked to specific promoted products.
The FCA expects authorized firms responsible for approving financial promotions of crypto asset firms to fulfill their regulatory obligations diligently. In cases of non-compliance, the FCA will take action and has already imposed restrictions on one authorized firm, preventing it from approving digital asset financial promotions.
Collaboration with businesses, including social media platforms, app stores, search engines, and domain name registrars, is underway to remove or block illegal promotions.
The FCA also works with payments firms to limit UK consumer exposure to entities issuing unauthorized promotions. It urges these businesses to heed the alerts issued and play their part in protecting UK consumers.
FCA Cracks Down On Illegal Promotions
Per the announcement, the FCA continues to identify and take action against firms illegally promoting crypto assets to UK consumers. Since the new regime came into effect, the FCA has issued 221 alerts, with the list continually updated to include firms that fail to comply or engage constructively.
To make informed investment decisions in the crypto space, consumers are advised to consult the Warning List, which helps identify firms whose promotions may violate the law, enabling them to consider such promotions with all available information.
Since October 8, 2023, firms promoting crypto assets in the UK must be authorized, and registered by the FCA, or have their marketing approved by an authorized firm.
Promotions must adhere to FCA rules, ensuring clarity, fairness, the absence of misleading information, and prominent risk warnings. These changes align crypto assets with other high-risk investments.
The financial promotion regime applies to all firms marketing crypto assets to UK consumers, regardless of their location or the technology used for promotion. The FCA’s rules aim to “enhance understanding of crypto asset purchases” and associated risks.
Furthermore, since February, the FCA has warned firms, urging them to prepare for the regulatory changes. A recent letter has also been published to remind digital asset firms of the impending compliance deadline.
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