FCA swiftly enforces crypto promo rules: 146 notices in 24hrs. Prioritizing clarity, safety, and fairness in line with high-risk financial instruments.
146 notifications about promotions in the cryptoasset field were issued by the Financial Conduct Authority (FCA) in the first 24 hours following the implementation of stricter regulations aimed at improving the clarity and accuracy of product marketing.
Stricter new regulations, enforced by the FCA, aim to prohibit incentives such as “refer a friend” bonuses and make consumer safety in cryptoasset product marketing safer. From October 8th, companies who want to advertise cryptoassets in the UK are required by law to be either registered or authorised by the FCA, or to have an authorised firm approve their marketing.
Promotions must also be fair, transparent, and not deceptive, clearly marked with risk warnings, and they cannot unnecessarily encourage consumers to invest, according to the new FCA regulations. These modifications align cryptoassets with other high-risk financial instruments.
All companies that sell cryptoassets to customers in the UK are subject to the financial promotion regime, regardless of the technology used for promotion or the company’s location abroad. The FCA’s regulations aim to educate consumers about the dangers associated with the products they buy.
On October 8 alone, the agency added nearly 100 companies to its warning list; however, the FCA clarified that it follows “a risk-based approach, so not all firms of potential concern will be added straightaway.”
This list will be updated on a regular basis to reflect companies who are not interacting with us in a productive way and may be promoting cryptocurrency illegally.
Increasing the stability and security of investing in cryptoassets
The FCA also cautioned individuals that investing in cryptoassets is still very risky and that they should be ready to lose all of their money if they do so. In order to safeguard UK consumers against fraudulent advertisements, it wants companies such as social media platforms, app stores, search engines, domain name registrars, and payment processors to take into account the alerts it has sent out.
The new regulations were explained by Nils Bulling, head of Avaloq’s digital assets product category, a financial software provider: The FCA’s financial promotion framework already applies to traditional financial services organisations, so their marketing plans and collateral are already in compliance.
Wealth managers have an advantage over crypto-native companies, such exchanges, due to their experience and institutional knowledge, both in terms of adhering to the FCA’s most recent regulations and developing and promoting investment advice on cryptoassets.
In the end, we support any regulations that increase the security and stability of investing in cryptoassets while also encouraging innovation in the financial industry. We anticipate additional wealth management companies entering this market and offering secure, legal access to a wider selection of investment options.
