With a focus on enhancing consumer protection, the UK’s Financial Conduct Authority (FCA) has extended the deadline for cryptoasset firms to implement changes to their crypto marketing practices. The new date of October 8 grants companies more time to integrate elements requiring substantial technical development, although it does impose restrictions on promotional incentives such as referral bonuses.
Firms now possess the opportunity to request this flexibility to make required back-office changes. A key highlight of this update includes a mandatory 24-hour cooling-off period for new clients, dictating that cryptoasset companies must wait a day after a customer’s first purchase before presenting them with any promotional activities.
From October 8, consumers should anticipate greater transparency on the part of crypto firms. The marketing communications should be clear, unbiased, and not misleading, with companies required to provide appropriate risk warnings instead of inappropriate enticements to invest.
Lucy Castledine, Director of Consumer Investments at the FCA, has asserted that these revisions are a response to the inadequacies of several overseas and unregulated crypto firms. “As a proportionate regulator, we’re giving firms that apply a little more time to get the other reforms requiring technology and business change right,” said Castledine.
With robust regulations, the FCA is laying the groundwork for serious consequences for noncompliant entities. Firms infringing upon the new directives beyond the October deadline will be subject to unlimited fines, up to two years’ imprisonment, or both.
Despite regulatory tightening, the UK remains a fast-growing global hub for crypto, witnessing a hundred percent increase in digital asset ownership between 2021 and 2022.
Interestingly, amidst stricter regulations, the FCA has experienced a surge in registration applications from crypto firms since 2020, with roughly 300 applications. It’s worth noting though that only 13% of total requests received approval.
The regulator encourages firms to resubmit if their initial applications do not meet all requirements. To date, the FCA has refused just five applications due to non-compliance related to money laundering, terrorist financing, and funds transfer.
In final remarks, the FCA emphasized that cryptoasset firms are required to “take all reasonable steps” to comply with the Travel Rule and are solely responsible for their conformity.
Source: Cryptonews
