Key Insights
- The UK’s financial regulator, the FCA, is increasing scrutiny on authorized cryptocurrency firms and their advertising practices.
- The FCA has expanded its alert list to include 221 non-compliant firms since implementing stricter marketing regulations in October.
- Firms must ensure risk warnings in crypto ads are legible, and the FCA is actively working with various entities to block illegal promotions and protect UK consumers.
In a bid to rein in the burgeoning cryptocurrency industry, the United Kingdom’s financial watchdog, the Financial Conduct Authority (FCA), has issued a stern warning to authorized crypto firms.
The FCA has stated that it will impose further restrictions on these firms should they fail to adhere to strict advertising regulations, which now even include the legibility of fonts in risk warnings.
FCA’s battle against misleading crypto ads
This development comes in the wake of the FCA’s move to expand its alert list for non-compliant firms. In a significant escalation, 221 companies have been added to this list since a new marketing regime was enacted on October 8th.
Under these new rules, cryptocurrency service providers are required to either diligently pursue registration with the regulator or seek approval from authorized firms for their communications to local clients.
The FCA underscored several “common issues” they have encountered in cryptocurrency promotions. This includes a recent episode where they blocked the chosen ad approver for unregistered firm Binance from endorsing any crypto-related communications. Consequently, Binance, the world’s largest cryptocurrency exchange, stopped accepting new clients in the country.
Read also! Crypto Exchange Binance Comply with UK Rules for Fair Promotions
The latest FCA announcement reinforces the need for authorized firms to exercise extreme caution when approving cryptocurrency advertisements. Firms have been instructed to be vigilant against claims of “security” or “safety” without accompanying, adequate risk warnings.
Moreover, the FCA emphasizes the importance of ensuring that these risk warnings are presented in a legible format, devoid of small fonts, hard-to-read coloring, or non-prominent positioning.
The FCA issued a firm statement on the matter, asserting that
We expect authorized firms approving the financial promotions of cryptoasset firms to take their regulatory obligations seriously.
Collaborative efforts to protect UK consumers
In its efforts to clamp down on illegal promotions in the country, the FCA is collaborating with various stakeholders, including social media platforms, apps, search engines, and other entities. The aim is to staunch the flow of illegal promotions and protect consumers in the UK.
The FCA also called upon payments firms to play their part in safeguarding UK consumers from companies issuing illicit promotions. It urged these businesses to heed the alerts it has issued and actively contribute to the protection of consumers in the United Kingdom.
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