Crypto firms in the United Kingdom could face some harsh punishments under the FCA’s proposed financial promotions regime.
According to the UK’s financial watchdog, the proposed new advertising law in the UK could put the heads of crypto companies in prison for up to two years for failing to meet certain promotional requirements.
On Feb. 6, the UK’s Financial Conduct Authority revealed that if parliament approves the proposed “financial improvement plan”, all domestic and overseas crypto businesses will have to meet certain requirements when advertising their crypto services to UK customers.
“Crypto-asset firms trading UK clients, including overseas firms, should prepare for this process,” the FCA said. “Taking action now will help them ensure they can continue to promote UK consumers legally. We urge companies to take all relevant advice available as part of their preparation,” he added. Under the FCA’s proposed plan, crypto companies will need to obtain permission from the FCA to advertise their services or be exempted under the Financial Promotion Act.
According to the regulator, there are only four ways a “crypto-asset business” can promote its services to customers in the UK:
The commissioner said any promotion made outside these channels would violate the Financial Services and Markets Act 2000 (FSMA), which carries a criminal penalty of up to two years in prison.
“We will take strong action where we see companies promoting crypto-assets to UK consumers breaching the requirements of the financial promotion process,” said the FCA. Along with possible jail time for their executives, companies caught violating the new regime could face website takedowns, public warnings, and other enforcement actions.
At this point, the FCA said it will wait for “necessary legislation” to publish “our final rules on the promotion of crypto assets,” perhaps indicating that the financial promotion regime may see an update or change. “Under any change in circumstances, we plan to adopt a flexible approach to crypto assets and have adopted our new law, effective from February 1, 2023, for other high-risk investments, ” said the FCA.
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