UK FCA takes action against rule-breaking crypto firms
The FCA issued a statement on Oct. 25, warning crypto firms that they still need to comply with the new rules on financial promotions for crypto assets.
The FCA said it has identified 221 breaches of the rules by crypto firms since then and will take “robust action” against them.
The new rules require crypto firms to provide clear and prominent risk warnings, accurate and balanced information, and appropriate safeguards for consumers when they market their products and services to UK consumers.
The papers also classify crypto assets as “Restricted Mass Market Investments, ” meaning they can only be promoted to certain types of investors, such as professional clients or high-net-worth individuals.
The regulator said it found that many crypto firms still need to comply with these rules and are making misleading or inaccurate claims about the benefits, safety, security, or ease of cryptocurrency use without highlighting the risks involved. The FCA also said it had received reports of consumers being pressured or incentivized to invest in crypto assets or offered free tokens or discounts.
The FCA warned that crypto firms that breach the rules may face sanctions, such as takedown requests, restrictions on their activities, or enforcement action. The FCA also reminded consumers that they should be wary of crypt promotions and may not have access to compensation schemes or ombudsperson services if things go wrong.
The FCA’s statement comes after it issued a “final warning” to crypto firms in September, urging them to prepare for the new regime and seek necessary approvals or exemptions before the deadline. The FCA also said it was disappointed by the lack of engagement from the crypto industry and that it had received only 18 responses to its consultation paper on the rules.
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