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The FCA said a crypto asset business registered under the MLRs with the agency could conduct the promotion.
The UK Financial Conduct Authority (FCA) has warned crypto companies within the nation to get ready for new rules on crypto asset promotions. The financial watchdog released a statement on the 6th of February, stating that crypto asset firms must comply with the new financial promotions regime or face the consequences of violation.
FCA Discusses Unauthorized Crypto Asset Financial Promotions
In the press release, the FCA explained that the government revealed its plans to bring the promotion of specific crypto assets under the radar of the regulator. The rule is set to affect all crypto companies targeting UK consumers, regardless of whether they are based in the country or overseas. At the beginning of this month, the UK government wrote that the proposed legislation is aimed at responsible innovations. Also, it is to subject crypto asset promotions to the FCA rules in order to help consumers make informed decisions. According to the policy statement published on the 1st of this month, the authority is introducing a bespoke exemption in the Financial Promotion Order for crypto asset businesses registered with the FCA under the Money Laundering, Terrorist Financing, and Transfer of Funds Regulators 2017 (‘MLRs).
Additionally, the policy statement showed that the government is reducing the implementation period for the rule. The implementation period would be 4 months, as opposed to the initial 6 months proposed. Upon the Parliament’s approval of the new promotions rule, crypto companies will need to observe four methods of communicating crypto asset promotions in the UK. The first FCA highlighted the “4 routes to communicating crypto asset promotions to UK consumers.”
Approved Means to Communicate Crypto Promotions to UK Consumers
The first method is the communication of the promotions by someone authorized by the FCA. Another means is if the promotion is by an authorized person but approved by an FCA-authorized individual. Thirdly, the FCA said a crypto asset business registered under the MLRs with the agency could conduct the promotion. Finally, the promotion will receive a green light if it falls under the exemption conditions in the Financial Promotion Order. The regulator continued:
“For these purposes, a firm only authorized under the Electronic Money Regulations or the Payment Services Regulations is not considered an ‘authorized person’ and so cannot communicate or approve financial promotions. This is set in legislation and cannot be modified by FCA rules.”
Most importantly, promotions by any crypto company that breaches any routes violate the Financial Services and Market Act 2000 (FSMA) are a criminal offense that attracts up to two years imprisonment.
“Cryptoassets remain high risk. We have repeatedly warned that consumers should be prepared to lose all of their money if they buy cryptoassets. Recent events such as the high-profile failure of several crypto asset firms further highlight the riskiness of these products.”
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