UK Financial Supervisory Authority issues final warning to companies selling crypto assets to UK consumers
The UK's Financial Supervisory Authority has issued a final warning asking companies that market crypto assets to UK consumers and their supporters to prepare for a financial publicity regime.。
The UK's Financial Conduct Authority (FCA) has issued a final warning asking companies that market crypto assets to UK consumers and their supporters to prepare for a financial publicity regime.。
The UK government has legislated to include certain crypto assets in the scope of the financial propaganda regime。All companies that market crypto assets to UK consumers, including those based overseas, must comply with this regime.。
Many of these companies refuse to work with the FCA。In a questionnaire sent to more than 150 companies, only 24 responded。
This lack of participation has left the FCA very concerned about whether unregistered companies are ready to comply with the new regime.。
After the system comes into effect, unauthorized and unregistered cryptocurrency businesses will only be able to disseminate financial propaganda activities that have been approved by authorized personnel or fall within certain narrow exemptions in financial propaganda orders.。
If, after the regime comes into force, unregistered crypto-asset companies continue to market crypto-assets to UK consumers without the approval of an authorized person, they are likely to be in breach of Section 21 of the Financial Services and Markets Act 2000 (FSMA).。This would constitute a criminal offence punishable by up to two years' imprisonment, an unlimited fine, or both。
The FCA said it would take action against companies that illegally advertise to UK consumers, including but not limited to putting companies on a warning list and taking steps to remove or block any illegal financial campaigns such as websites, social media accounts and apps.。
In some cases, the FCA will consider enforcement action, which may include applying to the court for an injunction, seeking compensation, or in the most serious cases, initiating criminal proceedings.。
The regulator reminds all businesses that support unregistered crypto-asset companies that they should carefully consider their obligations under the Proceeds of Crime Act 2002 (POCA).。
The FCA commented:
"We are concerned that the benefits derived by unregistered crypto-asset businesses from illicit financial propaganda activities may become criminal property that intermediaries may receive and dispose of through: investments made by app stores, social media platforms, search engines and domain name registrars for hosting illicit financial propaganda activities; investments made as a result of illicit financial propaganda activities; and payment of fees charged by companies or other intermediaries for providing services to unregistered crypto-asset businesses that generate income from illicit financial propaganda activities.。"
In addition, once in effect, the Online Security Act (OSB) will make it incumbent on search engines and social media companies to establish systems and processes to reduce the risk to users of the presence and dissemination of illegal content on their websites, including illegal financial propaganda.。This new regime will be overseen by the UK Communications Authority, which works closely with the UK Financial Supervisory Authority to build consensus on how the platform's obligations under the Organised Crime Act interact with the financial advocacy regime.。
Once the system comes into force, unregistered crypto-asset companies must stop making illegal financial propaganda to UK consumers.。
Unregistered crypto-asset companies can legally conduct financial campaigns to UK consumers, provided that these campaigns are approved by authorized companies.。When approving promotional activities, the authorized company must comply with the relevant rules, including those that require it to have the relevant capabilities and expertise。
The FCA would like to consider authorizing companies that approve crypto-asset financial campaigns to notify the regulator in accordance with Principle 11 (Relationship with Regulators) and SUP 15 before doing so.。
The regulator wants to prevent crypto-asset companies from engaging in illegal financial propaganda against UK consumers by putting in place systems and procedures to prevent UK consumers from accessing and responding to propaganda messages they provide.。Geo-screening of UK consumers, for example, and a clear statement that its services are not available to Britons。Controls should also be in place in the KYC / AML, onboarding and ongoing monitoring processes to ensure that UK consumers, such as those providing UK addresses or using UK payment methods, are not advertised。
If you don't build these systems, companies may run afoul of criminal law。
Businesses need to consider their position immediately if they believe they will violate the rules after the system takes effect。They must stop or discourage illegal propaganda。If businesses fail to comply with the requirements of the regime, the FCA is likely to post warnings against these businesses on its website and seek to remove or block these financial campaigns.。
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