The financial regulator expressed its frustration at the lack of engagement from crypto firms in a strongly worded letter.
The Financial Conduct Authority (FCA), the United Kingdom’s financial markets regulator, has again expressed its concern over the lack of engagement on the part of crypto firms that will soon be subject to new marketing rules. The consequences of noncompliance could be severe, it warned.
In a letter dated Sept. 21, the FCA said it was making a final warning to firms marketing crypto assets to UK consumers. The four-page letter first documented the efforts the agency had made to reach out to crypto firms and attempted to support them as they complied with rules announced June 8.
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The FCA has gone so far as to extend the Oct. 8 compliance deadline to Jan. 8, 2024, “to introduce features that require greater technical development,” and to publish lengthy notes on best practices. But “many unregistered, overseas cryptoasset firms […] have refused to engage with the FCA despite our best efforts,” the letter said. As evidence, the letter pointed out that only 24 such firms responded to a survey sent to 150 of them.
Compliance with the new regime will require firms to be proactive:
“Once the regime is in force, unauthorised and unregistered crypto businesses will only be able to communicate financial promotions which have been approved by an authorised person or are within the scope of certain narrow exemptions in the Financial Promotion Order.”
Illegal promotion of crypto assets would become a criminal offense. Violators would be placed on a warning list and their promotions could be blocked or removed from websites, social media and apps. Those intermediaries would be expected to heed the new regime as well, in line with Anti-Money Laundering and Counter-Terrorist Financing regulations and other measures.
FCA issues final warning to unregistered crypto firms about upcoming financial promotions regime. UK customer concerns cited. Compliance steps outlined. Expectations for supporting businesses discussed. Read the letter in full here: https://t.co/AjSTQKXDDl pic.twitter.com/hfX9qbLmBq
— Digital Currencies Governance Group (DCGG) (@DigitalDcgg) September 21, 2023
The FCA could seek monetary compensation from the violators, and contracts they enter into with UK citizens would not be enforceable, the letter continues. Crypto asset forms that are unable to meet the new requirements are expected to take steps to prevent UK consumers from responding to their promotions.
