The Financial Conduct Authority (FCA) has extended its regulatory reach to include crypto asset promotions, aiming to provide consumers with accurate information and adequate risk warnings. As of October 8, 2023, firms involved in promoting crypto assets in the UK must be authorised or registered by the FCA, or have their marketing approved by an authorised firm.
Common Issues Identified by the FCA:
- Misleading Claims: Some promotions make exaggerated claims about the ‘safety,’ ‘security,’ or ease of using crypto asset services without adequately highlighting the inherent risks.
- Visibility of Risk Warnings: Risk warnings are not sufficiently visible due to small fonts, hard-to-read colouring, or non-prominent positioning.
- Lack of Information: Firms fail to provide customers with adequate information on the risks associated with promoting specific products.
FCA’s Actions:
- Authorised firms approving crypto asset financial promotions must take their regulatory obligations seriously. Non-compliance may result in restrictions, as the FCA has already taken action against an authorised firm.
- Collaborating with social media platforms, app stores, search engines, and domain name registrars to remove or block illegal promotions.
- Working with payments firms to limit UK consumer exposure to firms issuing illegal promotions.
- Issuing 221 alerts against firms illegally promoting crypto assets to UK consumers since the new regime went live.
Consumers’ Role:
- Check the FCA’s Warning List before making any crypto decision to identify firms whose promotions may be breaking the law.
- Understand that even with new marketing rules, crypto assets remain high-risk and largely unregulated, and consumer protections may be limited if something goes wrong.
Coinsdrom’s Commitment:
Coinsdrom emphasises transparency throughout the entire process of buying and selling cryptocurrency. Users need to be aware of the risks involved in the crypto industry. While Coinsdrom provides a transaction platform, users are encouraged to exercise due diligence, conduct research, and make informed decisions.
Key Information for Firms Promoting Crypto Assets:
- Authorised or registered status is required by law for firms promoting crypto assets in the UK.
- Promotions must be clear, fair, and not misleading, with prominent risk warnings.
- The financial promotion regime applies to all firms marketing crypto assets to UK consumers, regardless of their location.
- Four lawful routes for communicating crypto asset promotions, including authorization, approval, registration under Money Laundering Regulations, or compliance with exemption conditions.
- Firms engaging in good faith with the FCA for compliance will be treated proportionately, but non-compliance will lead to robust actions to protect consumers.
The FCA’s new financial promotion rules align with its core commitments to reduce harm, set higher standards, and promote competition and positive change. Coinsdrom encourages users to approach crypto assets cautiously, considering the FCA’s warnings and the risks associated with the crypto market.
