The regulator identified three common shortcomings in crypto firms and issued over 200 warnings for non-compliance.
On October 25, the UK’s Financial Conduct Authority (FCA) announced that many crypto firms are failing to meet new promotional requirements. The relevant rules came into effect on October 8. These rules require companies to warn users that they could lose all their investments by investing in certain crypto products. Additionally, the rules prohibit companies from offering referral bonuses.
The FCA has now identified three common shortcomings. First, it says companies are making claims about the security, reliability, and ease of use of their crypto services without adequately highlighting the risks.
Second, it points out that some companies are not making their warnings sufficiently visible because they are using small fonts or difficult-to-see colors and placements.
Third, it says some firms are not adequately disclosing the risks associated with specific products.
FCA to Take Action Against Non-Compliant Firms
The FCA states that it will take action against firms that do not meet the requirements. The regulator has already imposed restrictions on a company named rebuildingsociety. This company was expected to collaborate with Binance to provide the exchange’s services in the UK; however, Binance later stopped accepting UK customers.
So far, the regulator has issued 221 warnings to firms violating the new rules. Many of these warnings were issued shortly after the regulations came into effect. While most of the companies causing concern are not well-known, some of them also include firms like HTX and KuCoin.
The new crypto marketing regime is extremely stringent and grants the government the power to impose unlimited fines on companies and imprison executives. The rules also apply to companies serving only UK customers and those located outside the UK.