Since introducing new crypto marketing rules in the United Kingdom on October 8, 2023, crypto-promoting firms have already breached these regulations at least 221 times, according to the UK Financial Conduct Authority (FCA). The breaches primarily involve failing to provide adequate risk warnings, insufficient information about potential risks, and making misleading claims regarding the safety and ease of using cryptocurrencies without highlighting associated risks.
The FCA’s latest disclosure follows an initial warning issued on October 9, stating that it had identified 146 instances of non-compliance within the first 24 hours of the new regulatory regime taking effect. These repeated breaches highlight ongoing challenges in the crypto advertising landscape within the UK.
While many of the alerts raised by the FCA pertain to dubious high-yield return schemes related to cryptocurrencies, even legitimate crypto businesses have faced warnings. An example of this is the case of Rebuilding society, a firm partnered with Binance, which had its promotional activities restricted by the FCA for failing to comply with the new rules. Subsequently, Binance temporarily halted the onboarding of new users from the UK.
UK’s FCA-led crypto regulation and enforcement
The FCA emphasized its expectations for allowed firms overseeing the financial promotions of crypto asset companies to take their regulatory obligations seriously. The authority pledged to take action against those failing to do so.
In its ongoing efforts to enforce compliance, the FCA has been collaborating with various stakeholders in the online space, including social media platforms, app stores, search engines, domain name registrars, and payment providers. The objective is to remove, block, and halt the flow of funds to promotions that violate these new regulations.
Under the new regulations, FCA-authorized or regulated firms can only promote or approve crypto-related advertisements, applying to all businesses, even those without a physical presence in the UK. These promotions are required to prominently display risk warnings and not incentivize crypto investments. Marketing tactics commonly employed in overseas markets, such as referral bonuses and memes, are prohibited or restricted in the UK.
James Young, Head of Compliance at Transak, noted that the FCA’s regulatory framework poses significant challenges for businesses to implement. However, he believes that the increased consumer protection measures will facilitate the adoption of cryptocurrencies on an exponential scale.
