The UK Financial Conduct Authority (FCA) has provided cryptocurrency firms with an extended deadline to implement stricter advertising regulations, according to reports. The FCA has granted additional time to crypto companies to comply with the rules, which aim to protect consumers from misleading or deceptive advertising practices. This move by the FCA highlights the growing scrutiny faced by the crypto industry and emphasizes the importance of transparency in promotional activities.
The Financial Conduct Authority (FCA) in the United Kingdom has announced an extension to the deadline for crypto firms to implement new marketing rules aimed at protecting consumers. While the core rules will still come into effect from October 8, 2023, certain measures requiring technical development, such as the 24-hour cooling-off period, can now be implemented from January 8, 2024.
Deadline Extension for New Crypto Rules by FCA
The FCA has classified cryptocurrencies as high-risk investments, cautioning individuals about the potential loss of their funds when investing in such assets. In order to safeguard UK investors, the regulator has mandated that all marketing materials related to cryptocurrencies must be clear and include risk warnings.
Under the new regulations, any public promotions related to cryptocurrencies must be approved by authorized firms and must not mislead or inappropriately incentivize individuals to invest. These rules apply to global firms and are aimed at strengthening consumer protection from the risks associated with crypto assets.
Crypto companies that fail to comply with the new rules after the October 8 deadline and continue to promote digital assets to UK users may face severe penalties, including an unlimited fine or up to two years of imprisonment.
Lucy Castledine, the Director of Consumer Investments, stated: “Starting from this October, crypto firms must market to UK consumers in a clear, fair, and honest manner. They must also provide risk warnings that are understandable to people. As a regulator that strives for proportionality, we are giving firms a little more time to ensure that they implement other technology and business-related reforms correctly. We will continue to closely monitor firms during this extended implementation period.”
An Ongoing Transformation
Crypto firms have the freedom to apply for flexibility that allows them to implement more technical measures, such as the 24-hour cooling-off period, client appropriateness testing, and categorization features, by January 2024. The FCA has pledged to take action against crypto companies that unlawfully market to UK users starting from October 8.
Commenting on this latest development, Steve Rosenblum, the CEO and co-founder of AI crypto risk management platform Libertify, emphasized that the era when crypto players focused primarily on their own interests is coming to an end. He highlighted that the regulatory landscape in the UK is rapidly shifting its focus towards safeguarding the interests of retail investors.
In his statement to CryptoPotato, Rosenblum mentioned that the UK is going through a significant transformation, where marketing any digital service or product without ensuring its suitability for customers will soon be considered a criminal offense.