The Financial Conduct Authority (FCA) has identified some recurring issues in the marketing of cryptoassets following the implementation of new regulations on October 8.
In a Wednesday blog post, the FCA highlighted three primary problems, which include misleading claims regarding safety and security, insufficient risk warnings, and the failure to emphasize product-specific risks.
The FCA said that since the introduction of the new rules, it has issued more than 200 alerts against firms suspected of illegally promoting cryptoassets.
“Since the regime went live, we have issued 221 alerts. This list will be continually updated as we identify firms that may be illegally communicating cryptoasset promotions and are failing to engage with us constructively.”
Furthermore, the agency has imposed restrictions on one authorized firm that approved crypto promotions falling short of the required standards.
In addition to working with crypto firms, the FCA is collaborating with various third parties, including social media platforms, app stores, and payment providers, to combat illicit promotions and mitigate consumer exposure.
The FCA called upon these entities to review the alerts it has published and play an active role in safeguarding UK consumers.
FCA Says Crypto Assets Are Still Risky Investments
The FCA emphasized that despite the new regulations, cryptoassets remain highly risky investments and are not subject to regulation.
“If something goes wrong, it is unlikely people will have access to consumer protections, so should be prepared to lose all their money,” the regulator wrote.
The new FCA rules, implemented earlier this year, require crypto firms to register with the financial regulator and have their marketing materials approved by an FCA-authorized firm.
Key updates include exchanges providing clear warnings to customers about the risks associated with crypto investments.
Marketing materials must be fair, transparent, and not misleading. Additionally, a 24-hour cooling-off period for new customers is required.
While the FCA extended the deadline for implementing technically challenging features like the cooling-off period until January 2024, firms are expected to adhere to the “core rules” from October 8.
The FCA has warned that failure to comply can result in criminal charges, including unlimited fines and up to two years’ imprisonment, for domestic and overseas exchanges operating in the UK.
The UK has been among the countries that have ramped up regulatory efforts following some high-profile bankruptcies last year.
Earlier this year, the country officially passed legislation to regulate cryptocurrencies and stablecoins as part of its broader financial regulatory reforms post-Brexit.
The law, dubbed the Financial Services and Markets bill, will grant regulators the authority to establish a tailored framework for the digital asset sector, supporting crypto’s “safe adoption in the UK.”