UK Regulator Issues 450 Alert On Illicit Crypto Promotions

Jimmy Aki
Last Updated:

Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.

On February 14, 2023, the Financial Conduct Authority (FCA) disclosed in a press release the actions it has implemented to combat illicit financial promotions.

The FCA, UK’s financial regulatory body, issued 450 consumer alerts in the last quarter of 2023, as reported. These alerts caution against companies unlawfully promoting cryptocurrencies.

UK Regulator Tackles Companies Promoting Illicit Crypto Ads

In June 2023, the UK financial watchdog released a Policy Statement PS23/6. This policy followed government legislation that expanded their purview to include the promotion of crypto assets. The regulations took effect on October 8, 2023.

Firms had the choice to request a modification by consent to postpone implementing the “back end” rules until January 8, 2024.

Despite this option, the FCA reported significant levels of non-compliance with the crypto promotion rules.

To find a lasting solution, they conducted reviews of both registered and unregistered crypto firms and identified common issues.

These issues included the use of generic risk summaries without adjustments for specific product risks like stablecoins or asset-backed coins. Additionally, there was the misuse of regulated status in promotions.

Furthermore, firms made claims about the safety, security, and ease of use of crypto services without providing evidence or risk disclosures.

Consequently, about 450 consumer alerts were issued against the digital asset companies illegally promoting crypto between October 8 and December 31, 2023.

Moreover, the regulator expressed concern about the proliferation of influencers promoting financial products. This includes credit and investments, on social media, particularly targeting younger demographics.

As a result, the FCA warned crypto companies of continued enforcement actions against illegal promotions in 2024.

Therefore, as of February 7, 2024, crypto companies must register with the authority or have their advertisements approved before advertising. The rules further mandate the inclusion of risk warnings and a 24-hour cooling-off period for first-time buyers.

These measures ensure that firms approving financial promotions possess the necessary competence and expertise for the products being advertised.

Is The FCA Overstepping On The UK Crypto Community

The FCA are causing what the agency refers to as “positive frictions” for UK users under its financial promotions legislation.

These “positive frictions” are measures aimed at counteracting social and emotional pressures to invest.

The FCA’s actions came after its decision to categorize all crypto assets as “restricted mass market investments.” This subjects them to additional restrictions and controls.

For instance, customers must disclose whether they are high-net-worth or restricted investors and answer competency assessment questions.

This legislation imposes new demands on current crypto users who aim to keep trading, irrespective of their years of experience.

FCA regulations have already caused some exchanges and platforms, like Luno and PayPal, to suspend their services.

Luno has restricted services for UK customers but still permits withdrawals. PayPal, on the other hand, has removed its crypto purchase feature.

Many citizens of the UK have expressed immediate dissatisfaction with the new rules and restrictions.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.