The UK financial regulator has declared that most crypto operators in the country are yet to offer a conclusive response to the regulator’s inquiry regarding the upcoming standards. The Financial Conduct Authority (FCA) on Thursday, September 21, warned the crypto firms to comply with the newly unveiled financial promotion rules.
The UK regulator warns that crypto businesses have failed to comply with its recent directive. The FCA lamented the noncompliance in a public letter penned Thursday, September 21, it decries that most firms ignored the directive.
FCA noted that only two dozen firms replied to the inquiry from a possible list of 150-plus firms. The letter indicated that FCA wondered about the ignorance since the survey had restricted the scope to the new promotion-related regulations.
FCA warned the noncompliant firms that the rules were becoming effective next month. The letter added that the rules would severely restrain the conduct of financial promotions. It changes the communication mechanism regarding financial promotions for unauthorized and unregistered businesses in crypto.
FCA Demands Compliance to Overseas Crypto Firms Serving UK Customers
The FCA statement condemned the poor management demonstrated by multiple unregistered firms. In particular, FCA expressed concerns regarding the crypto asset operating from overseas yet serving the UK customers. The letter demanded compliance from overseas firms.
FCA warned that crypto firms found making illegal financial promotions that target UK consumers would bear the punishment. The letter indicated that enforcing the promotion rules on October 8 would subject the noncompliant firms to stipulated punishment. The letter added that noncompliant crypto operators would necessitate 2 years imprisonment and bear an unlimited fine.
The new rules restrict unauthorized firms from sharing promotional content with UK customers. The restricted promotions include messages inviting customers to invest in digital assets.
FCA observes that the new promotional rule targeting crypto assets is already enforced via other financial products. The new directive restricts the scope of communications to conveying factual information. Also, the crypto assets firms can issue instructions on how the customers can execute transfer, withdraw, and sale orders.
Social Media Platforms and Mobile Applications Targeted by FCA Rules
The FCA letter reiterated that the new rules are formulated with a broad scope to extinguish the loopholes that encourage violations. As such, the scope extends to communications conveyed via applications and social media platforms. It restates the set of guidelines that FCA published in July, indicating that crypto memes could violate the agency’s promotion rules.
The letter by FCA comes at a time when crypto exchange Bybit was embroiled in a rumor of its considering exiting the UK market. The rumor indicated that the exchange foresees difficulty complying with the new rules.
Bybit chief executive Ben Zhou quickly disapproved of the rumors, restating that the crypto exchange priority involves compliance. Nonetheless, the executive was noncommittal on the final agreement that the firm would identify with as it progresses in the region.
New Promotion Rules Extend Scope to Firms Entangled with Non-compliant Advertisements
The new rules extend the scope to firms in proximity to those operating non-compliant advertisements. The target firms include application stores, search engines, payment firms, and social media applications. The rule considers that firms could suffer liability for orchestrating money laundering offenses given the links with the unregistered crypto firms.
The letter concluded by directing firms that perceive they would likely breach the new rules once they come into force to reconsider their position urgently. The warning indicates that FCA would not tolerate non-compliant crypto firms to the promotion rules.
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