Crypto firms will be named and shamed if they refuse to follow new expanded rules on how they sell their products, the UK’s Financial Conduct Authority (FCA) said.
It marks the latest from a series of crackdowns from the UK watchdog focusing on high-risk financial promotions in the crypto industry.
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All crypto services were switched to the high-risk investment category for marketing materials on Sunday (8 October). This means that all platforms have to have clear warnings about the dangers of losing money.
As well as this, platforms will need to meet “higher technical standards” which includes a 24-hour cooling-off period for new customers.
All public promotions will have to be approved by an authorised firm before publishing.
Lucy Castledine, the FCA’s director of consumer investments, confirmed on Sunday that its online warning list of violators will be updated hourly as crypto platforms break the set of rules.
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By GlobalDataThe FCA will be scouring the internet and scraping over 100,000 websites daily for breaches, Castledine said.
Platforms that are found to be breaking the rules will be given to international regulators and taken down with the help from major tech companies, she added.
Castledine previously said she had been “concerned by the failure of many overseas and unregulated crypto firms to engage with us on the new rules.”
“There are a number of fairly large overseas crypto exchanges that are targeting the UK that have failed to engage with us,” she said.
Several crypto platforms, including Bybit and PayPal, are planning to suspend some of its services while it adapts to the new rules.
Some start-ups in the industry have spoken out about having to completely rearrange its work flow to make the deadline.
“I accept there is impact, but the impact is so that their own customers can get a better service,” said Matthew Long, director of payments and digital assets at the FCA.
“I don’t think we will apologise if they’ve had to move a product team onto something where effectively it means that they’re giving a better service in line with the new consumer duty,” he added.
The regulatory narrative has shifted significantly in favor of crypto, GlobalData said in its Cryptocurrencies 2023 report.
Crypto regulation has moved on from “outright bans to a focus on proper regulation,” according to GlobalData.
Richard Cannon, partner at leading criminal defence firm Stokoe Partnership Solicitors, told Verdict that FCA’s new rules will “likely ease concerns around the risks of crypto companies misleading consumers.”
However, Cannon believes these rules will do little to help police the sector and protect consumers as the rules only extend to the marketing of products and services.
“Consumers must be aware of the volatility of such currencies, however more must also be done to effectively prevent and prosecute fraud within the crypto industry if the UK is to become a world-leader in the digital assets space,” Cannon said.
