Crypto companies have violated new UK promo guidelines 221 times, says FCA
October 26, 2023 6:42 AM
While many of the businesses about which the FCA has issued warnings appear to be fraudulent high-yield return schemes, the FCA has also issued warnings to legitimate businesses.
Since its implementation in early October, crypto marketing regulations in the United Kingdom have been broken at least 221 times, according to the country's financial authority.
The U.K. Financial Conduct Authority (FCA) released a statement on October 25 stating that despite the implementation of new rules for crypto promotions on October 8, businesses are still failing to provide visible enough risk warnings, are failing to provide adequate information about risks, and are making claims about the safety, security, or ease of using crypto without highlighting the risks involved.
After reporting 146 alerts for violations of the new rules in the first 24 hours after the new regime went live on October 9, the FCA has released its most recent warning count.
Many of the FCA's crypto-related alerts appear to be scams offering large returns on cryptocurrency investments, but the FCA has also taken action against what appear to be legitimate enterprises.
To ensure that Binance's marketing and communications were in line with the FCA's new regulations, the company announced some restrictions on Rebuilding Society in a statement dated October 10. As a result, Binance no longer accepts sign-ups from the United Kingdom.
"We anticipate that authorized firms that grant permission for cryptoasset firms to financially promote themselves will take their regulatory responsibilities very seriously," the FCA statement read. "We will take action in areas where this is not taking place."
It went on to say that it is coordinating with other organizations like social media sites, app marketplaces, search engines, domain registrars, and payment processors to eradicate illegal advertising.
Companies, regardless of whether they are based in the United Kingdom or not, must now have an FCA-authorized or regulated firm promote or approve any crypto-related advertisements.
All "prominent risk warnings" must be included, and promotions may not be used to encourage cryptocurrency trading or purchase. Referral bonuses and meme-based marketing are two forms of promotion that are prohibited and heavily regulated in the United Kingdom.
While the FCA's system is "very challenging" for firms to execute, Transak compliance head James Young said he believes consumer protection would promote adoption "on an exponential scale."