Crypto firms are preparing for a clampdown as the Financial Conduct Authority (FCA) rolls out a series of new rules this weekend, designed to stop rogue marketing tactics within the sector.
The new measures, first announced by the UK’s financial service regulator in June, are set to be implemented on Sunday, 8 October, and will rein in the crypto industry’s marketing strategies.
However, the FCA has offered breathing space for some firms for certain measures, instead of giving them until 8 January to implement those changes.
As part of the new framework, crypto companies are expected to make their marketing fair and accurately labelled with risk warnings, with certain marketing schemes now prohibited.
Calling current crypto advertisements as ‘misleading’, the FCA also released data that showed 151,800 consumers
who reported that they regretted their purchase of crypto assets, initially saw adverts and were encouraged or led to buy as a result.
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Additional measures include banning refer-a-friend bonuses and introducing a “cooling-off” period, where first-time investors will have to wait a full day before they can complete a transaction.
The new regulations establish four legal avenues to market to UK customers, which include both qualifying for exemptions and regulatory approval.
The regulatory body had given crypto firms a final warning last month but announced it was concerned whether the companies had all heeded this announcement.
“All firms marketing crypto assets to UK consumers, including firms based overseas, must comply with this regime,” a letter from the FCA stated.
The letter also stated that the firms “refused to engage with the FCA” and, despite efforts “only 24 firms responded to a survey that was sent to over 150 firms.”
The new framework, which was described by analysts at the time as an attempt to give consumers “extra protection in the crypto wild west”, is thought to require a major shift in strategy for many crypto firms.
“The regulator is getting new powers and intends to use them,” Kerrigan told City A.M. “The FCA has been communicating with the industry for months to stress that it is serious about firms complying with the rules from the moment they apply.”
