'Get Ready to Comply' - UK Regulator's Message to Crypto Companies
The United Kingdom's Financial Conduct Authority (FCA) has issued a warning to all crypto asset firms operating in the country, reminding them to ensure marketing compliance by the October deadline.
According to a letter dated July 4, the FCA has stated that starting from October 8, crypto companies marketing to users in the UK must be in compliance with the financial promotions regime or face the consequences.
"From 8 October 2023 all firms marketing cryptoassets to UK consumers, including firms based overseas, must comply with the financial promotion regime," the letter wrote.
The FCA has outlined "four routes to lawfully communicate cryptoasset promotions" that these firms can follow to ensure compliance.
These avenues include having an authorized party approve or communicate a promotion, having a promotion created by a business registered with the FCA, or having a promotion that qualifies as exempt under the country's Financial Services and Markets Act.
Failure to adhere to these guidelines can result in severe punishments for crypto firms, including two years of imprisonment, an unlimited fine, or both.
“We will take robust action against persons illegally promoting to UK consumers," the regulatory agency warned.
The FCA added that it will take robust action against those who illegally promote to UK consumers, including placing firms on a warning list, removing or blocking any illegal financial promotions such as websites or social media accounts, and taking enforcement action.
To further encourage compliance, the FCA expects crypto firms to advertise their offerings through registration under the Money Laundering, Terrorist Financing, and Transfer of Funds Regulations 2017 (MLRs).
This means that firms must submit the necessary documents to the FCA and pay a registration fee. The FCA will then have a three-month evaluation period to review the submission.
42 Companies Have Registered With the FCA
At the time of publication, the FCA has listed 42 registered crypto firms that are in compliance with its requirements.
These include popular names like Bitstamp, Revolut, MoonPay, and Galaxy Digital UK.
However, the total number of crypto asset firms operating in the UK is estimated to be much higher, indicating that many are still working towards meeting the FCA's regulatory standards.
The FCA originally announced the October deadline on June 8, urging crypto firms to adopt a marketing approach that allows customers a "cooling-off period" to consider the risks of investing in digital assets.
Along with complying with the marketing regime, companies must also register with the FCA to carry out crypto asset activities in the UK.
The UK has been among the countries that have ramped up regulatory efforts following some high-profile bankruptcies last year.
Last month, the country officially passed legislation to regulate cryptocurrencies and stablecoins as part of its broader financial regulatory reforms post-Brexit.
The new law, dubbed the Financial Services and Markets bill, will grant regulators the authority to establish a tailored framework for the digital asset sector, supporting crypto’s “safe adoption in the UK."