FCA red-flags crypto promotion practices since new rules.
The UK's Financial Conduct Authority (FCA) has identified several recurring problems with the way cryptoassets are being marketed since new regulations governing this took effect on October 8. In a statement, the FCA outlined three major areas of concern: misleading claims about safety and security, inadequate risk warnings, and failure to highlight product-specific risks.
Since the new rules came into force, the FCA has already issued over 200 alerts against firms that may be illegally promoting cryptoassets. It has also imposed restrictions on one authorized firm that was approving crypto promotions that did not meet the required standards.
In addition to crypto firms, the FCA is also working with various third parties like social media platforms, app stores and payments providers to curb illegal promotions and limit consumer exposure. It called on these businesses to consider the alerts it has published and "play their part in protecting UK consumers."
The FCA stressed that even with the new regulations, cryptoassets remain high-risk investments and unregulated. Consumers are unlikely to have access to protections if something goes wrong, so they could lose all their money.
The new rules require crypto asset promotions to be authorized by the FCA, cleared by an authorized firm, or exempt under the financial promotion order. Promotions must also be fair, clear, not misleading, and carry prominent risk warnings.
Since February, the regulator has been asking crypto firms to prepare for these changes. It has also outlined its expectations around compliant promotions and said it will review crypto marketing materials for adherence to the rules.
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