The UK’s Financial Conduct Authority (FCA) has announced an extension of the deadline for cryptoasset firms to implement specific regulatory changes in their cryptocurrency marketing processes.
In a recent update, the regulatory authority revealed that key rules governing cryptocurrency marketing, such as the prohibition of incentives like referral bonuses, will now take effect on October 8. However, newly established firms will receive additional time to incorporate features that necessitate significant technical development.
“Firms are required to request flexibility, enabling them to implement the necessary backend adjustments successfully,” the FCA emphasized.
One of the notable changes includes the introduction of a 24-hour cooling-off period for new customers. This means that crypto firms must wait for a day after a new customer makes a purchase before sending them any promotional offers.
Starting October 8, UK customers will enjoy increased protection, as crypto marketing by companies must adhere to principles of clarity, fairness, and honesty. The new, more stringent regulations require cryptoasset firms to provide appropriate risk warnings rather than using inappropriate incentives to encourage investments.
Lucy Castledine, Director of Consumer Investments at the FCA, stated, “Beginning this October, crypto firms must conduct marketing to UK consumers in a transparent, equitable, and comprehensible manner. They are obligated to offer risk warnings that people can readily comprehend. As a regulatory body that values proportionality, we are granting firms that apply for it a bit more time to ensure the successful implementation of other reforms that entail technological and operational adjustments.”
The decision to enforce stricter regulations is a direct reaction to the numerous shortcomings observed in overseas and unregulated cryptocurrency firms, according to Castledine.
The financial regulator has clarified that cryptocurrency companies found in violation of the updated rules, and failing to achieve compliance beyond the October 8 deadline, will be deemed to have committed a criminal offense. Consequently, such companies may be subject to severe penalties, including the possibility of incurring unlimited fines and/or facing imprisonment for up to 2 years, as highlighted by the regulatory authority.
The United Kingdom Emerges as a Leading Global Cryptocurrency Hub
The United Kingdom has rapidly emerged as one of the world’s swiftest-growing cryptocurrency hubs. According to research conducted by the FCA, digital asset ownership in the UK has seen a twofold increase between 2021 and 2022.
Moreover, since 2020, the FCA has received approximately 300 registration applications from cryptocurrency companies. It’s worth noting, however, that the regulator has granted approval to only 13% of these applications.
As per recent statistics reported by Cryptonews, the FCA has disclosed that only 38 applications successfully navigated the registration process. Interestingly, a significant portion of firms voluntarily withdrew their submissions, encouraged by the regulatory body to resubmit if initial application requirements were not met.
The statistics further reveal that the FCA rejected five applications due to non-compliance with regulations related to money laundering, terrorist financing, and fund transfers.
In a recent announcement earlier this week, the FCA emphasized that cryptocurrency firms are expected to “take all reasonable steps” to adhere to the Travel Rule and underscored that these companies bear sole responsibility for ensuring compliance.
