The Financial Conduct Authority has warned companies which market cryptoassets to ensure they comply with the financial promotion regime.
In a letter yesterday (July 4), Victoria McLoughlin, head of market interventions in the digital assets team at the FCA, and Lucy Castledine, director of consumer investments at the regulator, said the UK government has now legislated to bring qualifying cryptoassets within the scope of the financial promotion regime.
That means from October 8 this year, all companies marketing cryptoassets to UK consumers, including those based overseas, will need to comply with the financial promotion regime.
The letter outlined the four routes to “lawfully communicate” cryptoasset promotions to UK consumers (which includes on websites, mobile apps, social media posts and online advertising).
These routes are that the promotion is either communicated by an authorised person, or made by an unauthorised person but approved by an authorised person.
The promotions are also lawful if they have been communicated by a cryptoasset business registered with the FCA under the money-laundering regulations, or that they otherwise comply with the conditions of an exemption in the Financial Services and Markets Act 2000.
Promotions that are not made using one of these routes will be a criminal offence, punishable by up to two years in prison, and unlimited fine or both.
“We will take robust action against persons illegally promoting to UK consumers,” the FCA warned.
The rules include a mandated ‘cooling off’ period for first-time investors in crypto, meaning they have to wait 24 hours before reconfirming their request to proceed.
Calls for greater regulation of crypto grew following the sudden collapse of Sam Bankman-Fried’s $32bn empire, FTX late last year.
In November last year, a group of crypto executives told MPs they wanted more regulation and said FTX’s collapse may not have happened if proper regulation existed.
However, others have said the sector should not be regulated, as that would further legitimise an industry that poses no threat to financial stability and is an inherently risky investment.
sally.hickey@ft.com
