The Financial Conduct Authority (FCA) of the United Kingdom said on October 8 that the new financial marketing framework would apply to crypto assets.
The banking regulator offered numerous legal paths for corporations to promote crypto assets to U.K. consumers in a letter dated July 4. Communication by an authorized person, communication by an unauthorized person but sanctioned by an authorized person, or communication by a firm regulated under the FCA Money Laundering Regulations (MLRs) are all legitimate options.
Firms that do not employ any of the three specified methods must follow the exemption provision in the Financial Services and Markets Act 2000 Financial Promotion Order 2005. Under this framework, cryptocurrency companies must “use specific risk warnings and positive frictions” in their advertisements, as well as guarantee that “their promotions are fair, clear, and not misleading.”
The regulator promised to vigorously enforce this legislation and threatened that breaches would be punished by two years in prison, an unlimited fine, or both. In addition, the regulator warned that defaulters would be placed on a warning list and that such illicit financial marketing would be removed and blocked, as well as prospective lawsuits. Meanwhile, a company does not have to be registered in the United Kingdom before selling to its inhabitants. They would, however, continue to be subject to the financial promotion regime.
“The regime applies to financial promotions communicated from outside the UK but capable of having an effect in the UK.” This is true even if the campaign is not exclusively aimed at UK consumers.”
This is not the first time that UK officials have taken action against cryptocurrency advertisements. Several cryptocurrency advertisements have already been ordered removed by the Advertising Standards Authority for being misleading.