UK's Financial Conduct Authority (FCA) Prepares Strict Regulations for Cryptocurrency Advertisements
In the wake of pending legislation, the UK's FCA is planning to introduce strict regulations on cryptocurrency advertising, regardless of significant criticism.
Fri, 09 Jun 2023, 00:22 am UTC
The Financial Conduct Authority (FCA), the financial watchdog in the United Kingdom, is gearing up to implement a stringent regulatory framework targeting cryptocurrency advertisements. These regulations will come into effect once the pending crypto-focused legislative policies are finalized.
Under the proposed rules, cryptocurrencies will be classified as limited access investment products, requiring "clear risk warnings" to be included in all promotional content. The FCA also intends to prohibit enticing schemes such as referral bonuses or "welcome bonuses" to discourage reckless investment behaviors.
The regulatory measures will be implemented through the Financial Services and Markets Bill, currently undergoing legislative deliberation in Parliament. This bill outlines the UK's financial framework post-Brexit and grants the FCA the authority to enforce regulations in the growing crypto sector, aligning with the proposed legislation.
Despite facing significant opposition during the consultation process last year, the FCA remains committed to its agenda. Critics have raised concerns about categorizing cryptocurrencies as high-risk assets and limiting enticing offers to potential investors.
Simultaneously, the FCA has initiated a public forum to gather feedback on its additional guidance, aimed at ensuring companies understand the impact of the crypto promotional requirements. The proposed guidelines advise crypto businesses to conduct thorough due diligence and verify the intrinsic value of advertised crypto assets to avoid misleading promotions.
Promotions related to stablecoins will also face strict scrutiny. Companies advertising stablecoins must ensure that their claims regarding stability or ties to fiat currencies do not mislead potential investors. These measures reflect the FCA's ongoing commitment to curbing and preventing significant financial harm. Companies that fail to comply with these promotional regulations could face severe penalties, including potential imprisonment for up to two years, substantial financial fines, or both.
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