By Chris Dorrell
The Financial Conduct Authority (FCA) has warned crypto businesses that breaching new financial promotion regulations could lead to up to two years in prison.
The FCA said that crypto companies which fail to meet its financial promotion rules will breach the Financial Services and Markets Act, “a criminal offence punishable by up to two years imprisonment.”
“We will take robust action where we see firms promoting cryptoassets to UK consumers in breach of the requirements of the financial promotions regime,” the FCA confirmed.
According to the new rules, there are four routes to promote crypto assets to UK customers.
Normally, financial promotions would have to go through an FCA authorised person. However, under a “bespoke exemption”, crypto firms can use financial promotions for a limited period of time as long as the crypto firm is registered with the FCA’s antimoney-laundering rules.
“Firms must start preparing now for this regime”, the watchdog warned.
Withers’ Harvey Knight commented: “The UK government is cracking down on the financial promotion of crypto investments to the general public.
“Only those small number of crypto asset businesses already registered with the FCA for anti-money laundering purposes will be permitted to issue such financial promotions and only for a limited period,” Knight continued.
CryptoUK’s Ian Taylor said without the exemption, the promotions would have been “a de facto ban on promoting crypto in the UK”.
All firms marketing cryptoassets to UK consumers. regardless of whether the firm is based overseas or what technology is used, will need to comply with the regulations.
The exemption to the FCA’s financial promotion rules was part of the government’s wider plans to “robustly regulate” the crypto industry after a series of scandals blighted the industry last year.
While the exemption makes it easier for crypto firms to advertise, around85 per cent of crypto firms failed to meet minimum regulatory requirements when applying for registration with the FCA.
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