- Regulator will categorize crypto as a “restricted mass market investment”
- Most respondents disagree with the proposed rules
- Crypto firms must guarantee financial promotions are clear, fair, not fraudulent
The UK’s Financial Conduct Authority (FCA) is ramping up cryptocurrency regulations in the context of finalizing planned legislation for the industry, CoinDesk reported, citing documents published on June 8.
They will categorize crypto as a “restricted mass market investment” under the new rules and mandate all promotions or advertisements contain risk warnings. The regulator will also prohibit incentives such as “signup bonuses” or “refer a friend.”
Regulator will proceed with measures despite lack of public support
With the Financial Services and Markets Bill, which the British Parliament is reviewing, the FCA will be authorized to set rules for the crypto industry in accordance with the applicable legislation. Most respondents disagreed with the proposed rules when the FCA consulted them in 2022, including with the intention to classify crypto as a high-risk investment. However, the regulator will proceed with the measures anyway.
Crypto firms are mandated to perform “due diligence”
The FCA also introduced new guidance aimed at making sure crypto companies have a clear grasp of the implications of crypto asset promotion requirements. According to these rules, they should perform “adequate due diligence” and be able to guarantee that the financial promotion is clear, fair, and not fraudulent.
Rules for stablecoins
Firms promoting stablecoins will have to make sure claims regarding fiat currency backing are accurate and not misleading.
The FCA decided on the new rules for promotions because of estimates that crypto ownership in the country increased by 100% between 2021 and 2022. Every tenth person the regulator surveyed admitted to owning crypto.
Crypto sector faces increased restrictions
Recently, the US Securities and Exchange Commission sued Binance and Coinbase for operating as unlicensed brokers, offering unregistered securities, and a slew of other purported violations.
As Bankless Times reported, companies violating the FCA’s soon-to-be-effective advertising rules will face a fine, up to two years of imprisonment, or both.
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