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The United Kingdom’s Financial Conduct Authority (FCA) warned crypto businesses on Thursday to fall in line with new financial promotion rules, which the vast majority of businesses appear to be ignoring.
In a public letter published by the FCA, the regulator said that only 24 of 150+ firms have replied to a survey sent to them by the regulator related to the new rules. After taking effect next month, the rules will severely restrict how financial promotions from “unauthorized and unregistered crypto businesses” can be communicated.
“We are concerned by the poor engagement from many unregistered, overseas crypto asset firms who have U.K. customers on this important change,” wrote the FCA in its statement.
After taking effect on October 8, crypto firms “must cease making illegal financial promotions to U.K. consumers,” the letter added. Punishments for continuing such activity could include “up to 2 years imprisonment, an unlimited fine, or both.”
The FCA did not immediately respond to Decrypt’s request for comment.
The rules specifically bar unauthorized crypto firms from sharing promotions with U.K. customers that invite them to invest in crypto assets, a rule that already exists for other financial products. Communications are limited to “purely factual information,” as well as instructions to existing customers on how to “transfer, withdraw or sell their existing assets.”
The rules are intentionally broad, extending to communications made over apps and social media. A separate set of guidelines published by the FCA in July outlined how even crypto memes could run afoul of the agency’s promotion rules.
Last week, crypto exchange Bybit was rumored to be planning a departure from the U.K. due to the difficulty of following such rules. Bybit CEO Ben Zhou immediately clarified that compliance remained the company’s “first priority,” but that no final agreement had been made on how the firm would move forward in the region.
Firms adjacent to those running non-compliant ads are also in the FCA’s crosshairs. That includes social media apps, search engines, app stores, and payment companies, all of which may be liable for money laundering offenses if associated with unregistered crypto firms.
“If firms believe they are going to be in breach after the regime comes into force, they need to urgently consider their position,” the letter concluded.