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- 1 The U.K. FCA plans to scrutinize crypto advertising and ban crypto incentives.
- 2 The proposed FSMB shall place the U.K. back in the league.
The U.K. FCA plans to forumlate firm rules for crypto advertising, different classification, and a ban on incentives under the new regulations. The European Union recently signed the Markets in Crypto Assets (MiCA), a comprehensive regulatory framework for the crypto industry. At the same time, the United Kingdom’s Financial Conduct Authority (FCA) proposed specific changes in the upcoming Financial Services & Markets Bill (FSMB).
FCA Proposed Certain Alterations in FSMB
Per the FCA’s documents released on May 8, 2023, the agency is set to include stricter rules for crypto advertising. These shall be placed as soon as the planned laws for the industry are finalized. New rules would also classify crypto as “restricted mass market investments,” any advertising or promotions on the subject must contain “Clear risk warnings.”
The incentives distributed for referring a friend and new joiners will be banned. Crypto is set to be included in the purview of the United Kingdom’s financial activities via the FSMB. Besides being essential for regulating crypto, the bill represents the prowess of the U.K.’s post-Brexit financial strategies. The bill is currently going through parliamentary procedures.
Once the bill is passed, the Financial Conduct Authority would have the jurisdiction to set rules for the sector following the law.
However, when the financial watchdog was asked about the rules in 2022, the respondents initially disagreed with the proposal. They were skeptical about including the regulator’s intentions to treat crypto as a high-risk investment and blocking new investors from receiving non-real-time promotional offers.
The document also highlights that along with the forthcoming rules, the agency opted for public comment on the new guidance system. This step was taken to ensure that the firms clearly understand the implications of the listed requirements for promoting and advertising crypto assets.
The proposed system argues that the firms must carry out the required due diligence process. They should also have enough evidence of the underlying crypto assets to ensure that the financial promotion is fair, transparent, and not misleading. To promote stablecoins, the firms must ensure that the claims made regarding their stability and backed-up fiat currency are honest and trustworthy.
Crypto ownership in the United Kingdom doubled between 2021 to 2022 which is one of the several reasons why regulators need to impose clear and comprehensive rules fast. The data regarding the same was published by the agency some time ago. The regulations set by the financial watchdog are part of its commitment to safeguard customers.
Sheldon Mills, Executive director of consumers and competition at the Financial Conduct Authority, said in the press release, “It is up to people to decide whether they buy crypto. But research shows many regrets making a hasty decision. […] Our rules give people the time and the risk warnings to make informed choices.”
If any crypto firm tries to break the upcoming promotional rules, a fine, two years imprisonment or both could be implied.
By October 8, 2023, the marketing of “qualifying crypto assets” would fall under the scope of the agency’s promotional regime. Moreover, registered crypto firms can choose their own advertisement under the temporary exemption.
The recent crackdown on the industry by the U.S. SEC could benefit them as many crypto entities are looking to move businesses offshore.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
