FCA extends deadline for new crypto marketing rules
The City regulator has extended the deadline for crypto firms to comply with certain elements of the new, stricter marketing rules.
The Financial Conduct Authority (FCA) announced in June that it was introducing marketing restrictions on the sector, which were all set to come into effect on 8 October.
The rules are similar to those imposed on the peer-to-peer lending industry and are designed to protect consumers.
Read more: P2P regulations were “dry run” for crypto
However, in response to “industry readiness”, the FCA has now said that cryptoasset firms can apply for an extension to make some of the changes. If their application is successful, they will have until 8 January 2024 to implement the 24-hour cooling off period, appropriateness tests and client categorisation features.
All other parts of the new rules – including clear risk warnings on websites and ensuring that adverts are clear, fair and not misleading – will still come into effect from 8 October 2023.
“From this October, crypto firms must market to UK consumers clearly, fairly and honestly,” said Lucy Castledine, director of consumer investments at the FCA.
“And they must provide risk warnings people understand. As a proportionate regulator, we’re giving firms that apply a little more time to get the other reforms requiring technology and business change right. We’ll maintain our close eye on firms during this extended implementation period.
“We are concerned by the failure of many overseas and unregulated crypto firms to engage with us on the new rules. Come 8 October, we will be taking action against firms illegally marketing to UK consumers.”
Anyone who continues promoting cryptoassets to UK customers after the October deadline without complying with the rules, may be committing a criminal offence punishable by an unlimited fine and up to two years’ imprisonment, the FCA said.
“It’s clear the FCA recognises the damage that can be done to overall investor confidence when such high-risk investments are bought by people who seem woefully unaware of the risks,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
“However, it knows it’s also walking a tricky tightrope. It recognises these beefed-up safeguards are needed to ensure consumers are more protected from another crypto implosion, but at the same time it doesn’t want to quash innovation in the digital coin and blockchain space.’’
In June, Peer2Peer Finance News revealed that representatives from the P2P lending community have been in secret talks with government officials and regulators about rolling back some of financial promotion rules, claiming that they are having a negative impact on their business by discouraging would-be investors.