On Monday, the Financial Conduct Authority (FCA) issued a warning and urged U.K. crypto companies to start preparing now for the upcoming restrictions on financial promotions.
The FCA pointed out that under the upcoming crypto regulations, promotions will have to be clear and fair, and customers will have the right to a 24-hour cooling-off period so that they don’t make hasty decisions. Moreover, these regulations will apply to firms marketing crypto assets regardless of where they are based or what technology is used for promotion.
In other words, these restrictions are comprehensive and are expected to affect companies of every size and type. That is why the FCA insists that crypto companies should act now if they want to avoid the risk of potential prosecution.
Anybody know a company that had to leave the UK after misleading financial promotions? “UK Financial Regulator Warns Crypto Firms of Jail Time for Unauthorized Financial Promotions” https://t.co/tvxkz0hbhY
— Simon Dixon (@SimonDixonTwitt) February 6, 2023
Is There Anything To Worry About?
According to the regulator, breaching their new rules could lead to a prison term of up to two years. Last year, new regulations for the crypto sector were proposed. Subsequent to this announcement, several prominent crypto companies, such as Sam Bankman-Fried’s FTX, have filed for bankruptcy after over $8 billion of customer funds were lost in the past year.
The FCA has reiterated that crypto assets remain highly risky, and cautioned consumers to be prepared to lose all of their money if they choose to invest. Furthermore, recent events have highlighted the potential for significant losses, with the collapse of several crypto asset firms demonstrating the volatility of the sector. Consumers should note that, in the event of losses, there is unlikely to be any compensation available through the Financial Services Compensation Scheme.
