UK Government Announces New Regulation For Cryptoasset Promotions

According to the United Kingdom’s financial watchdog, newly proposed advertising rules in the United Kingdom could potentially see executives of crypto firms facing up to two years in prison for failing to meet certain requirements around promotion. The Financial Conduct Authority (FCA) is in charge of making sure the rules of the FCA are followed in the UK.

The Financial Conduct Authority (FCA) of the United Kingdom released a statement on February 6 saying that if the proposed “financial promotions regime” is approved by Parliament, all crypto firms, both inside and outside the country, would have to follow certain rules when advertising their services to customers in the United Kingdom.

If the FCA’s proposed regulatory framework is implemented, companies dealing in cryptocurrencies would be required to get prior authorization from the FCA before advertising their services, unless they qualified for an exemption under the Financial Promotion Order. According to the governing body, a “cryptoasset firm” in the United Kingdom may only advertise and sell its products and services to clients via one of the following four channels:

The promotion is communicated by an FCA-authorised person.
The promotion is made by an unauthorized person but approved by an FCA-authorized person. Legislation is currently making its way through Parliament that, if passed, would introduce a regulatory gateway that authorized firms will need to pass through in order to approve financial promotions for unauthorized persons.
The promotion is communicated by a crypto asset business registered with the FCA under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
The promotion otherwise complies with the conditions of an exemption in the Financial Promotion Order.

According to the regulatory body, any marketing that is carried out outside of these channels would be in violation of the Financial Services and Markets Act(FSMA) of 2000 , which has a criminal penalty of up to two years in jail for each offence. Firms that are detected breaking the new system risk having their website pulled down, receiving public warnings, and being subjected to further enforcement proceedings. In addition, the people in charge of these companies could go to jail.

The Financial Conduct Authority (FCA) has said that it will wait until “necessary legislation” is passed before publishing “our final guidelines for crypto asset promotions.” This might perhaps indicate that the financial promotion regime will undergo upgrades or adjustments in the future.

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