U.K.’s Financial Conduct Authority (FCA) has issued its final warning to cryptocurrency firms about the upcoming financial promotions regime slated to begin in October.
In a Sept. 21 letter, the financial regulator stated that all firms marketing crypto assets to U.K. consumers, including overseas firms, must comply with these regulations.
The financial promotions regime outlines several guidelines for crypto firms before promoting their products within the region. The FCA had promised to enforce this regulation strictly and threatened that violators could be punished with two years imprisonment, an unlimited fine, or both.
The regulator said:
“This regime is important for reducing and preventing harm to consumers from investing in cryptoassets that do not match their risk appetite. It is up to consumers to decide whether they buy crypto, but they should do so on the basis of fair and accurate information that helps them make effective investment decisions.”
The FCA explained that crypto was added to the regime because it is an inherently “high-risk investment.”
CryptoSlate reported that cryptocurrency firms might struggle to comply with the financial promotions regulations. Delphi Labs general counsel Gabriel Shapiro stated that a crypto project could spend more than $500,000 to ensure it complies with the laws.
Poor engagement from foreign companies
Meanwhile, the FCA decried the poor engagement it got from unregistered, overseas cryptocurrency firms about the upcoming regulation.
According to the letter, many foreign firms refused to engage with the financial watchdog despite its best efforts to ensure compliance with the forthcoming regulations. Per FCA, only 24 firms responded to a survey sent to more than 150 companies.
The FCA wrote:
“This lack of engagement gives us serious concerns about unregistered firms’ readiness to comply with the new regime.”
Warns social media platforms
The FCA warned that intermediaries, including social media platforms and search engines, must ensure unregistered crypto asset firms do not communicate illegal financial promotions to U.K. consumers through their platforms.
According to the regulator, the newly passed Online Safety Bill (OSB) places a duty on these companies to mitigate the risks posed by the presence and dissemination of illegal content on their sites, including illicit financial promotions.
On Sept. 19, OSB passed its last parliamentary reading and is ready to become law despite opposition from several technological companies.
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