Crypto firms need to be ready to comply with new rules regarding financial promotions in the U.K., the Financial Conduct Authority (FCA) says.
The regulator said all crypto firms doing business with investors in the U.K., including offshore firms, will soon need to comply with its new regime that will bring crypto asset promotions under the regulator’s oversight.
“Firms must start preparing now for this regime. We will take robust action against firms breaching these requirements,” the FCA said.
The new regime, which remains subject to parliamentary approval, will establish conditions for promoting crypto activities to U.K. consumers and investors.
“This would mean firms being required to use specific risk warnings and positive frictions (such as a 24-hour cooling off period) […] in addition to the overarching requirement that their promotions are clear, fair and not misleading,” the regulator said.
Promotions that don’t comply with the new requirements will be considered a breach that represents a criminal offence punishable by up to two years in prison.
The FCA said it will publish its final rules for crypto promotions once the legislation has been finalized, and said it will apply the same rules to other high-risk investments.
Last week, the British government published a policy statement setting out its latest approach to regulating crypto promotions amid concerns that the planned new regime would effectively ban all crypto activities by requiring promotions to be approved by an authorized person under U.K. securities law.
Given the apparent reluctance of authorized personnel to approve crypto promotions, the government said it will introduce a new temporary exemption for crypto businesses registered with the FCA under its anti-money-laundering legislation.
The government will also reduce the implementation period for the new regime from six to four months, it said, due to recent volatility in crypto markets “and the risks presented to consumers.”
The statement also indicated the government will review the exemption as it develops its future approach to crypto regulation.