The Financial Conduct Authority (FCA) has updated its guidance for cryptoasset firms, following recent legislative changes that bring crypto promotions targeting UK consumers under its oversight. The new rules aim to enhance consumer understanding of crypto investments and the associated risks. Particularly given that when the regulations came into force, more than 200 crypto firms did not comply with the fundamental requirements.
UK Crypto Firms Receive New Marketing Compliance Guidance from FCA
Cryptoasset firms in the UK are now navigating a new regulatory landscape. The FCA's latest guidance, born out of extensive industry consultation, is tailored to help these firms adhere to the updated marketing rules. The guidance clarifies how authorized firms should integrate “Consumer Duty” act into their promotional activities.
Lucy Castledine, the FCA's Director of Consumer Investments, emphasized the alignment of the new crypto marketing rules with those for other high-risk investments. The FCA has proactively sought industry feedback to refine these rules and the accompanying guidance, acknowledging the valuable insights gained during the consultation phase.
“We continuously seek industry’s input to get rules, their implementation, and the support we offer right. This guidance is no exception and we’re grateful for all the input we received,” Castledine added.
Crypto Evolves Quickly
The FCA acknowledged the rapid evolution of the crypto sector and the global regulatory environment, committing to ongoing engagement with industry players and periodic guidance reviews. The FCA had previously released examples to distinguish between good and poor marketing practices in preparation for the new financial promotion rules, which have been in effect for almost a month.
Despite introducing these rules, the FCA maintains its stance on the high-risk nature of crypto assets, cautioning investors to be ready for the possibility of total investment loss. The FCA reminded us that its “Warning List” serves as a resource for consumers to identify unauthorized firms and make more informed decisions regarding crypto investments.
Speaking at @DeloitteUK Consumer Duty - Next Steps event, Nisha Arora revealed that since the #ConsumerDuty came into force some good firm practices are already benefitting #consumers of #FinancialServices. https://t.co/MCz60ACwLx
— Financial Conduct Authority (@TheFCA) November 1, 2023
Additional FCA’s Support and Future Plans
The FCA has provided a modification by consent, offering registered or authorized cryptoasset firms a transitional period to implement certain technical aspects of the new rules. Firms have until 8 January 2024 to incorporate features such as the 24-hour cooling period, client appropriateness testing, and client categorization. All other aspects of the financial promotions regime have been effective since 8 October 2023.
Firms promoting cryptoassets in the UK must now be authorized or registered by the FCA or have their marketing approved by an authorized firm. This alignment with the rules for other high-risk investments follows extensive collaboration with the government, international counterparts, and the industry.
The FCA has been actively preparing firms for these changes since February and is adopting a proportionate approach to enforcement for firms that engage in good faith toward compliance. In the initial fortnight of the marketing rules' implementation, the FCA issued 221 alerts, highlighting prevalent issues in crypto marketing.
Looking ahead, the FCA plans to release a Discussion Paper on the regulation of stablecoins for payments in the UK, inviting stakeholders to participate in the discourse. This move underscores the FCA's commitment to shaping a regulatory framework that keeps pace with the dynamic crypto market.
This article was written by Damian Chmiel at www.financemagnates.com.
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