Technology

UK FCA Cracks Down on Unregistered Crypto Firms – Crypto News

Published

3 years ago

September 21, 2023

Dripp

The UK’s Financial Conduct Authority (FCA) has sounded the alarm after being troubled by the number of unregistered crypto firms showing a “lack of engagement” with the upcoming financial promotions regime. This concern stems from a recent survey by the FCA revealing that out of over 150 firms approached, merely 24 took the time to respond. This tepid reaction was especially pronounced among overseas crypto businesses catering to UK customers.

Moreover, the FCA expressed in its Thursday letter,

“The lack of engagement gives us serious concerns about unregistered firms’ readiness to comply with the new regime.”

Hence, from October 8th, all crypto asset firms, even those located overseas but marketing to UK consumers, must align with the UK’s financial promotions standards.

Understanding the New Regime

The new regulations encompass crypto promotions across various media, such as websites, social media, and online advertisements. Consequently, to abide by these rules, unregistered crypto firms should have their promotions sanctioned by someone authorized by the FCA.

Additionally, the FCA’s guidance elaborates on the necessary steps for compliance. It also delineates the possible actions against non-compliant entities. A notable inclusion in the guidelines is a section about non-compliant crypto memes, which could be viewed as financial promotions.

Those who neglect these rules could face dire consequences. Specifically, they might contravene section 21 of the UK’s Financial Services and Markets Act 2000. Such a breach is serious since it could result in up to two years in prison, an unlimited fine, or both.

FCA’s Warning for Intermediary Entities

The FCA’s warning not only implies crypto firms but also businesses that back unregistered crypto entities also received a heads-up. Moreover, social networking networks, app shops, search engines, and payment businesses are all included. Besides being aware, these intermediaries must recognize the perils of endorsing firms that target UK consumers with unlawful promotions.

Furthermore, the FCA’s letter underlined the obligations of UK businesses under the Proceeds of Crime Act 2002. The regulator stated,

“We are concerned that businesses supporting unregistered crypto asset firms may be at risk of committing money laundering offenses under POCA.”

Consequently, the implications are clear since the intermediaries could inadvertently deal with criminal property via fees accrued from hosting illegal promotions.