UK's FCA Introduces Stringent Advertising Rules for Cryptocurrency Firms
Summary:
The UK's Financial Conduct Authority (FCA) has enacted new regulations requiring cryptocurrency firms to advertise their products and services clearly and transparently. The updated rules include banning referral bonuses and implementing a 24-hour cooling-off period for first-time cryptocurrency investors, intending to protect consumers from the high risks associated with digital assets. While some major companies, such as exchange OKX and MoonPay, have complied with these regulations, others, including Binance and Bybit, have suspended registration for new UK users. Industry experts have called for regulatory uniformity globally for easier compliance and smoother customer experiences.
The UK's Financial Conduct Authority (FCA) introduced new regulations on October 8th that require cryptocurrency firms to advertise in a clear, fair and transparent manner. The tightened Financial Promotions (FinProm) regulations include a ban on referral bonuses and a 24-hour cooling-off period for first-time cryptocurrency investors, aimed at better protecting consumers from the high risks associated with digital assets. James Young, compliance chief and money laundering reporting officer at on-ramp firm Transak, believes these additional regulations increase protection for consumers, making cryptocurrency investment safer and thereby exponentially increasing its acceptance and usage.
Referral bonuses are popular marketing tools across industries, and Young pointed out that more detail may be needed from the FCA on the types of incentive schemes still available. With the UK becoming a global cryptocurrency hub, more major companies like exchange OKX and payment platform MoonPay are complying with FinProm, but the rules can be challenging for others operating on a worldwide scale.
Cryptocurrency exchanges such as Binance and Bybit have paused the registration process for new UK users as they endeavour to meet the new requirements. Young observes that with the range of regulations firms must now follow, compliance could prove to be a challenge. Accordingly, the deadline for UK-registered cryptocurrency firms to fix technical issues related to the new marketing regulations has been extended to January 8th, 2023.
As for ensuring consistency across different jurisdictions, Young suggested segregating legal entities to comply with various regulatory requirements while maintaining a seamless customer experience. He also advocated for uniform global regulations to handle the different approaches by various countries towards cryptocurrency.
On a global scale, the Group of Twenty (G20) agreed on a cryptocurrency regulatory roadmap on October 13th, which calls for thorough regulation within and beyond G20 jurisdictions. Despite noting that global mass adoption of cryptocurrency could be aided through effective regulation and industry confidence, Young stressed that the balance between consumer protection and innovation should be maintained. He maintains that regulatory measures should not effectively drive firms from the market but should balance fairness to the emerging market dynamics.
Published At
10/25/2023 12:32:29 PM
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