The UK’s financial regulator, the Financial Conduct Authority (FCA), has released a fresh report to show its findings regarding compliance for crypto companies that advertise crypto services.
In October 2023, the FCA introduced regulations on cryptocurrency promotion and has been helping them with compliance since.
FCA Collaborates With Firms To Bring Regulation To Crypto Sector
🚨 The UK FCA tightens crypto ad rules 🚨
– Log customer data
– Promote <10% of assets after rigorous checks
– Continuous monitoring required
– The FCA is upping the game for crypto compliance.#CryptoRegulation #FCA pic.twitter.com/iMHMLSxCBu
— MarsNext (@0xMarsNext) August 8, 2024
The regulator looked at how crypto firms are onboarding the new regulations regarding promoting crypto services. It then randomly selected companies, requesting information before following up with on-site visits.
The regulations that the FCA were most interested in seeing how they were being implemented included the 24-hour cooling-off period, personalised risk warnings, client categorisation, assessing the appropriateness of the investment, record keeping and due diligence of crypto assets. The regulator then divided its findings into good and poor practices.
For personalised risk warnings, the FCA gave the following examples for both good and bad practices;
Examples Of Good Practice
– Positioning the warning on its own page with no other information, making the warning the sole focus for the consumer.
Examples Of Poor Practice
– Using language in the personalised risk warning that downplays the risks of the assets or encourages consumers to proceed with the journey.
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Regulator Says New Rules In Place To Support Both Firms And Consumers
Regarding expectations for its latest guidelines, the FCA said, “Our strengthened financial promotion rules set a minimum baseline for firms that promote qualifying crypto assets and we give clear guidance on what is expected.
The strengthened rules also support the approach of the Consumer Duty, where it applies. Firms should consider whether the needs of their customers mean they should take steps beyond those prescribed in our rules to deliver good outcomes.”
The FCA announced in June 2023 that new rules would be introduced in October of that year. They were to replace rules set up in August 2022. The FCA foresaw that October would come to soon for complete compliance. Therefore, it gave some companies until 8 January 2024, to achieve full compliance.
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