Specifically, the FCA issued a total of 146 notifications concerning promotional activities related to crypto assets. It is anticipated that various entities, including but not limited to social media platforms, app stores, search engines, domain name registrars, and payment service providers, will duly acknowledge these alerts and contribute to safeguarding the interests of consumers within the United Kingdom by preventing illicit promotions.
To ensure informed investment decisions, consumers are encouraged to consult the FCA's Warning List before engaging in any crypto-related investments. This list serves as a valuable resource for consumers to gauge whether a firm's promotional activities may be in violation of the law.
It is important to note that the regulatory approach adopted is risk-based, meaning that not all potentially problematic firms will be immediately included in the list. The list will undergo continuous updates as the regulatory authority identifies firms that might be unlawfully promoting crypto assets without engaging in constructive dialogue.
The FCA reiterated that the purchase of crypto assets remains a high-risk endeavour, and individuals should be prepared for the possibility of losing their entire investment.
Furthermore, as of 8 October 2023, any entity seeking to promote crypto assets in the UK is legally mandated to be either authorised or registered by the Financial Conduct Authority (FCA). Alternatively, they must have their marketing materials approved by an authorised entity. The regulatory requirements stipulate that promotions must be transparent, equitable, and devoid of misleading information, prominently display risk warnings, and must not inappropriately encourage investments. These changes bring crypto assets in line with other high-risk investments.
Importantly, the financial promotion regulations are applicable to all firms engaged in marketing crypto assets to UK consumers, regardless of their geographic location or the technology employed for promotional purposes. These regulations are designed to enhance consumer understanding of crypto asset investments and the associated risks.
The government has taken legislative measures to encompass specific crypto asset promotions within the financial promotions framework. Subsequent to this amendment, crypto asset firms have four lawful avenues for bringing awareness to their crypto asset promotions:
It is noteworthy that firms have been apprised of these impending changes since February 2023 with recent communications highlighting the deadline for compliance. Additionally, the regulator has outlined its expectations for firms in terms of compliance with the new regulations.
In the event of non-compliance, the regulatory body will take assertive measures to eliminate illegal content in order to protect consumers.
The newly established financial promotion rules for crypto asset promotions align with the FCA's three core commitments as delineated in the 2023/24 Business Plan, which prioritise the reduction and prevention of significant harm, the establishment and testing of elevated standards, and the encouragement of competition and positive change within the sector.
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