UK Financial Regulator Records Over 221 Violations of New Crypto Ad Rules
Summary:
The UK's Financial Conduct Authority (FCA) reports that companies have violated the recently enacted crypto advertising rules over 221 times since early October. The violations include lack of clear risk warnings and inadequate risk information in adverts. The FCA has not only acted against suspicious high-return schemes but also reputable businesses. These new regulations stipulate that only FCA-authorised firms can approve or promote crypto adverts and require prominent risk warnings on such promotions. Despite the challenge for businesses, increased consumer protection is expected to boost crypto adoption.
The Financial Conduct Authority (FCA) in the United Kingdom has revealed that companies have violated the recently implemented cryptocurrency advertising regulations at least 221 times since its introduction in early October. The FCA, in its declaration on October 25, noted persistent inadequacies since the rules took effect on October 8, such as faint risk warnings, insufficient risk-related information, and unsupported claims about cryptocurrency's safety, security, and simplicity of use, without due risk considerations.
The regulatory body issued 146 warning alerts for violations within the first 24 hours of the new policy enforcement, with the recent violation count summary following closely. Among the various alerts related to crypto, the FCA appeared to focus more on dubious schemes promising high returns on crypto investments. However, the authority has not shied away from sanctioned actions on seemingly legitimate businesses either. An instance was reported in the October 10 statement where restrictions were placed on Rebuildingsociety - a FCA-compliant company that Binance had partnered with to ensure adherence to the new advertising rules. Following this, Binance suspended registering new users in the UK.
The FCA expects firms that approve financial promotions for cryptocurrency businesses to take their regulatory responsibilities seriously, and it pledges to take necessary actions when this is not the case. It's currently collaborating with social media platforms, app stores, search engines, domain name registrars, and payment providers to prevent banned promotions, including halting funding to such promotions.
The new regulations stipulate that cryptocurrency advertisements can only be approved or promoted by FCA-authorized or regulated firms. This rule is applicable to all businesses - even those not based in the U.K. The law demands clear risk warnings on all advertorials and discourages inducements for investments in crypto. Common international marketing strategies like memes and referral bonuses are prohibited in the U.K.
The Head of Compliance at Transak, James Young, deemed the FCA regulations a significant challenge for businesses to adopt. However, he sees an exponential increase in cryptocurrency adoption, as these changes will bolster consumer protection.
Published At
10/26/2023 1:36:33 AM
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