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UK government warns unregistered cryptoasset firms about upcoming financial promotion regime

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The United Kingdom Financial Conduct Authority (FCA) in a letter issued a “final” warning to cryptoasset firms marketing or offering services to UK consumers. It specifically stated that firms marketing crypto assets to UK consumers and those supporting them should get ready for the new marketing rules; the financial promotion regime. Non-compliance would attract severe sanctions. 

This move legislated by the UK government would bring certain crypto assets into the scope of the financial promotion regime. The financial promotion according to FCA would include communications made through a website or an app.

The regime is intended to protect consumers from investing in crypto assets that do not fit their risk space and arm them with relevant information that would help them make better decisions. However, the rules are the same as those that apply to promoting other high-risk investments, FCA said.

The FCA has stated that it followed a fair and thorough process in involving firms. While some firms responded, others did not. The FCA expressed concern over the poor response from many unregistered crypto asset firms overseas that have UK consumers. Out of over 150 firms surveyed, only 24 responded. The FCA also doubts whether these firms are prepared to comply with the new regime when it is implemented.

However, there will be sanctions for unauthorized firms promoting cryptoassets to UK customers once the regime resumes. Such actions would be considered a criminal offense and a breach of the law, carrying penalties of up to 2 years imprisonment, an unlimited fine, or both, according to the FCA.

Additionally, the FCA advises businesses supporting unregistered cryptoasset firms to carefully consider their involvement and ensure they do not facilitate or support money laundering. The FCA also mentions that search engines will have duties in this regard when the regime comes into force.

Furthermore, compliance with the regime requires having a financial promotion approved by an authorized firm according to the relevant rules. These rules include requirements for firms to possess the necessary competence and expertise. The FCA also requests that firms considering approving cryptoasset firms for financial promotions notify them beforehand.

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