FCA recalls the ban in a statement announcing significant steps in its work to share illegal financial promotions on social media.
Starting October 8, 2023, the UK regulator The Financial Conduct Authority (FCA) will ban incentives to invest in crypto, such as “refer-a-friend” bonuses.
The FCA reminds that companies must introduce clear risk warnings and a 24-hour cooling-off period to give first-time investors time to consider their investment decision. These are measures similar to the regime in force for other high-risk investments.
UK Crypto
Proposals for the new social media guide will modernize the information businesses must use when promoting financial products or services online. For example, the FCA is consulting on expanding its guidance to reflect the current ways in which social media is used to advertise financial products and services.
Lucy Castledine, the FCA’s director of consumer investment, says the agency has seen an increasing number of ads that don’t meet the guidance for stopping consumer harm. “We want people to stay on the right side of our rules, so we’re updating our guidance to clarify what we expect from businesses when they trade financial products online.”
The FCA says it has stepped up scrutiny over online financial promotions, which it says are often illegal. It also refers to the significant increase in the notoriety of influencers.
In fact, the FCA has warned financial influencers or “finfluencers” that crypto promotions or financial advice, without FCA approval, could be an offense punishable by up to two years in jail, an unlimited fine, or both. The law even applies to promotions from outside the UK that may affect people in the country.
Regulations on Memes Promoting Cryptoactives
Under the proposed guidelines by the FCA, memes deemed to be promoting crypto assets may need to add disclaimers to comply with advertising regulations.
Regarding promotions in the cryptocurrency industry, the FCA stated that it had seen memes from cryptocurrency companies. Many are unaware that these memes are subject to their promotional rules. Promotional memes are quite popular in the cryptocurrency sector, and any communication could be considered a financial promotion.
The FCA considers cryptocurrencies to be a high-risk investment. Companies can advertise crypto assets to general retail investors. However, they must include risk warnings. The FCA also suggested a ban on investment incentives.
Crypto ATMs
The regulator also informed at the beginning of July of the close surveillance it is carrying out on crypto ATMs. Since early 2023, FCA has inspected 34 UK locations suspected of hosting crypto ATMs.
The regulator claims that the visits are part of a coordinated operation with other regulatory agencies “to crack down on this illicit sector.” During this time, they interrupted 26 machines that were operating illegally throughout the country.
The FCA reminds us that if someone uses a crypto ATM in the UK, they are using a machine that works illegally and may be giving their money to criminals. Whoever does it is not protected by law if something goes wrong they could lose their money, he says. “We will continue to warn the public and take appropriate enforcement action against unregistered crypto ATM operators,” the FCA says.
As of January 10, 2021, all UK crypto asset companies must be registered with the FCA. Since then, operating without a registry is a crime.
By Marina Meza
