In a recent and strongly-worded letter, the Financial Conduct Authority (FCA), the United Kingdom’s financial markets regulator, has made a final call to unregistered cryptocurrency firms, to comply with the upcoming marketing regulations. Expressing frustration over the lack of engagement from such entities, the FCA highlighted the potentially severe consequences of non-compliance.
The four-page letter laid out the agency’s efforts to connect with and support crypto firms in complying with the new regulations introduced on June 8. However, the letter voices the FCA’s disappointment in the responses received or the lack thereof, from overseas cryptoasset firms. With only 24 firms responding out of the 150 contacted, the FCA is shaking its proverbial head in dismay.
The authority isn’t standing still though. It has taken measures like extending the compliance deadline from October 8, this year, to January 8, 2024, to facilitate necessary technological developments. It has also published extensive notes on best practices.
Once the new rules come into play, crypto businesses that are unauthorized or unregistered will effectively be hushed, only able to communicate promotional material that has been approved by an authorized individual or that falls within certain exemptions in the Financial Promotion Order.
Should these warnings be disregarded, the FCA has made it clear that the illegal promotion of crypto assets will be considered a criminal offense. The repercussions don’t stop there. Such violations could lead to placement on a warning list, blocking or removal of promotions from digital platforms, in line with Anti-Money Laundering (AML) and Counter-Terrorist Financing regulations. In a definitive move against defiance, contracts entered into with UK citizens by violators may not be enforceable.
But it’s not just penal enforcement. The FCA also offers a pathway for redemption. It expects firms that fail to meet the new standards to take steps to avoid UK consumers from responding to their promotional activities. Simply put, clean up your act or be prepared to face the music.
For cryptocurrency firms, the sense of urgency in the FCA’s words should be taken seriously. The UK’s regulatory approach to cryptocurrencies and its desire for compliance reflect a paradox within the realm of digital assets – a push towards innovation balanced with a need for ensuring safe and fair markets. This ongoing tension between innovation and regulation raises key questions on the future direction of cryptocurrencies as acknowledged financial instruments.
Source: Cointelegraph
