New UK crypto ad laws will go into effect in October
The Financial Conduct Authority warns that those found in violation could face up to two years' imprisonment.
The United Kingdom’s Financial Conduct Authority (FCA) said the new financial promotions regime would apply to crypto assets starting October 8.
In a July 4 letter, the financial regulator outlined several legal routes for firms to promote crypto assets to U.K. consumers.
These legal routes include communication by an authorized person, communication by an unauthorized person but approved by an authorized person, or communication by a firm registered under the FCA Money Laundering Regulations (MLRs).
Firms that do not use any of the three stated means must comply with the provision for exemption under the Financial Services and Markets Act 2000 Financial Promotion Order 2005.
Under this regime, crypto firms must “use specific risk warnings and positive frictions” in their ads and ensure that “their promotions are fair, clear and not misleading.”
The regulator promised to enforce this regulation strictly and threatened that violations would amount to a criminal offence punishable by two years imprisonment, an unlimited fine, or both.
Besides that, the regulator warned that defaulters would be placed on a warning list and the outright removal and blockage of such illegal financial promotion and possible lawsuits.
Meanwhile, a firm does not necessarily need to be registered in the U.K. before marketing to its residents. However, the financial promotion regime would remain applicable to them.
“Financial promotions communicated from outside the UK, but which are capable of having an effect in the UK, are within scope of the regime. This applies even if the promotion is not solely targeted at UK consumers.”
This is not the first time regulators in the U.K. would make a move on crypto adverts. In the past, the Advertising Standard Authority has ordered the removal of several crypto adverts for being misleading.