Peddling crypto products in the UK? You’ll soon need authorization for that, says the country’s financial regulator.
In a new statement from the Financial Conduct Authority (FCA), firms that do not follow one of the four mandated routes for promoting cryptocurrencies could face criminal punishment “by up to two years imprisonment.”
Under the new rules, which still need approval from UK Parliament before they come into force, any promotions will need to be made by an FCA-authorized person or approved by one.
If not these two routes, any crypto promotions will need to come from a business that is already registered with the FCA, and complies with the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017. Compliance with these regulations means that firms need a “bona fide” base of operations in the UK, among other things.
The fourth and final route states that firms that are exempt from the Financial Promotion Order are also allowed to advertise.
If any of these four routes are not followed, crypto advertising will be a breach of section 21 of the Financial Services and Markets Act 2000 (FSMA).
The FCA also reiterated its opinion that it considers any crypto assets “high risk,” pointing towards the collapse of many centralized exchanges in late 2022 as evidence of this, and they should be prepared to lose all their capital.
Crypto ads in the UK
Regulators in the UK have been clamping down on crypto advertising for years.
Luno, a consumer-focused crypto trading app that is a subsidiary of the Digital Currency Group (DCG), had an advertising campaign banned in June 2021.
The high-profile campaign, which ran for almost six months on the London underground, read “If you're seeing Bitcoin on the Underground, it's time to buy.” The U.K. Advertising Standards Authority (ASA) deemed the promotion irresponsible and misleading.
The news comes as the rules that govern the UK crypto industry are shifting rapidly.
At the start of this month, the UK announced a host of new rules, governing everything from the authorization process for crypto exchanges to the rules governing crypto custodians.