A British regulator is promising “robust action” against cryptocurrency companies violating its advertising rules.
That action, the U.K. Financial Conduct Authority (FCA) announced Monday (Feb. 6), could include up to two years in prison for firms that breach its restrictions on financial promotions.
“All cryptoasset firms marketing to UK consumers, including firms based overseas, will soon need to comply with the new UK financial promotions regime,” the FCA said in a news release.
“Firms must start preparing now for this regime. We will take robust action against firms breaching these requirements.”
The requirements — first proposed last year — are not yet final, but the FCA says they will be similar to new rules for other high-risk investments. Promotions would have to be “clear, fair and not misleading,” and companies must offer a 24-hour cooling off period for customers to rethink purchases.
The FCA argued that crypto assets remain high risk, and cautioned consumers they are unlikely to be compensated by the government if they lose money.
“We have repeatedly warned that consumers should be prepared to lose all of their money if they buy cryptoassets,” the authority said. “Recent events such as the high-profile failure of several cryptoasset firms further highlight the riskiness of these products.”
The agency’s crypto-related crackdown comes as the FCA is dealing with an uptick in misleading financial promotions, as PYMNTS reported last week.
The FCA said it sent out more than 1,800 alerts last year to protect consumers from financial scams, and required companies to amend or remove 8,582 promotions during 2022, a 14-fold increase from the prior year.
The regulator said the increase was fueled by “significant improvements” to the digital tools it employs to keep track of problem firms and misleading advertisements.
Its latest actions are part of a broader wave of crypto-related regulations fueled by the “high-profile failures” the FCA mentioned. Included in this are new proposals from the U.K. treasury introduced last week that subject crypto companies to the same oversight as traditional finance firms.
The treasury says its plan requires crypto trading platforms to define “the detailed content requirements for admission and disclosure documents” to make sure crypto exchanges have “fair and robust standards.”
Across the Atlantic, the White House has recently put out a roadmap for the crypto industry and urged Congress to move faster in enforcing the sector.
“Congress needs to step up its efforts,” the roadmap said, with Biden administration officials calling on legislators to “expand regulators’ powers to prevent misuses of customers’ assets.”
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