FCA’s New Crypto Marketing Rules Impose Jail Time on Offenders
UK regulators will enforce very tough new rules regarding crypto asset marketing from October 8 onward, according to the Financial Conduct Authority (FCA).
Among the new regulations is a ban on incentives like “refer a friend” bonuses. Firms will also be required to post prominent risk warnings, not unlike tobacco or some investment products.
A Sweeping Change to Crypto Marketing Rules
The rules will also apply to firms promoting crypto asset products on behalf of another firm. They will also apply to non-fungible tokens (NFTs)—a development that could have a significant knock-on effect on NFT marketing.
Initially, the FCA will consider giving crypto firms extra time to implement certain changes needing more technical work. For example, companies could get until January 8, 2024, to add a 24-hour cooling-off period.
However, these concessions are not automatic. Businesses must apply to enjoy such flexibility. The core rules will still take effect from October 8, 2023.
From that date onward, UK consumers will gain another layer of protection. However, international firms marketing to UK customers will have to change their business practices or risk committing a criminal offense.
Crypto firms’ marketing must be “clear, fair and not misleading.” This also includes not “inappropriately” encouraging people to invest.
Read more: NFT Marketing: A Guide to Promoting Non-Fungible Tokens
In a statement, Lucy Castledine, the FCA’s director of consumer investments, expressed concern about many overseas and unregulated crypto companies failing to engage on the new rules. She warned, “Come October 8th, we will take action against firms illegally marketing to UK consumers.”
In the United Kingdom, it is a legal requirement for all crypto asset service providers to register with the FCA. Not doing so is, on its own, against the law.
Rulebreakers Face up to Two Years in Prison
After the October deadline, anyone promoting cryptoassets to UK customers without complying risks an unlimited fine and/or up to two years in prison.
To further assist firms in making the necessary improvements, the FCA published examples of good and poor practices regarding preparations for the new marketing rules.
However, the regulator was more than clear on its website: if you cannot promote crypto assets in a compliant way, you must withdraw or restrict access to that promotional content in the United Kingdom.
Despite attempting to establish itself as a “crypto hub,” the UK financial watchdog has established a tough regime of regulation. In August, the FCA revealed it approved only 13% of applications from crypto firms wanting to operate in the UK.