CEOs of crypto firms could potentially face up to two years in prison for breaking certain promotion-related criteria under the proposed advertising laws.
When marketing their crypto services to customers in the U.K., all crypto firms, domestic and foreign, will need to adhere by certain rules.
According to the UK's financial watchdog, CEOs of crypto firms could potentially face up to two years in prison for violating certain promotion-related criteria under recently proposed advertising laws.
The U.K. Financial Conduct Authority stated in a statement on February 6 that, if the proposed "financial promotional regime" is approved by Parliament, all crypto firms in the nation and abroad will have to adhere to particular guidelines when marketing their crypto services to U.K. clients.
On February 6th, the U.K. Financial Conduct Authority announced that, if Parliament approves the proposed "financial promotions regime," all crypto firms, both domestic and international, will be required to adhere to certain regulations when advertising their crypto services to U.K. customers.
This new regime could have a significant impact on the crypto industry, ensuring that customers are provided with accurate and transparent information when considering investing in digital assets.
The FCA stated that companies who sell crypto assets to UK customers, including those that are situated overseas, "must prepare for this regime."
"Taking immediate action will ensure that they are able to legally promote to UK consumers. We encourage businesses to follow all relevant guidance as they make their preparations, it continued.”
Cryptocurrency firms would need to receive FCA approval to market their services under the FCA's proposed framework, or they would need to be exempt from the Financial Promotion Order.
The regulation states that a "crypto asset business" in the UK can only advertise its services to clients through the following four ways:
An FCA-approved individual announces the promotion.
Although allowed by the FCA, the promotion was made by an unlicensed party. Parliament is now debating legislation that, if passed, would establish a regulatory gateway through which recognized corporations would have to pass in order to sanction financial advertising for unregistered people.
A company that deals in digital assets and is registered with the FCA in accordance with the 2017 Money Laundering, Terrorist Financing, and Transfer of Funds (Information on the Payer) Regulations is the one that is communicating the promotion.
The financial promotion order's exemption requirements are otherwise met by the promotion.
Any promotion that is done outside of these channels will be in violation of the Financial Services and Markets Act 2000 (FSMA), which has a criminal penalty of up to two years in prison, according to the regulator.
The FCA declared, "We will take aggressive action where we detect firms advertising crypto assets to UK consumers in violation of the standards of the financial promotions regime.
Companies that violate the new rules risk having their websites taken down, receiving public warnings, and other enforcement actions, in addition to possible prison time for their executives.
The FCA has stated that they will publish "our final guidelines for crypto asset promotions" once the "necessary legislation" has been passed, implying that the financial promotions regime may be updated or modified.
According to the FCA, "subject to any changes in circumstances, we plan to apply a consistent approach to crypto assets to that taken in our new rules, in place from February 1, 2023, for other high-risk investments."