The UK's Financial Conduct Authority (FCA) is intensifying its regulatory efforts in the cryptocurrency industry, issuing warnings to unregistered exchanges and seeking legal action against companies providing services to UK residents or promoting digital assets in the country.
In October, the FCA warned hundreds of unlicensed crypto exchanges, including Elite Bit Markets, Nexure Gainbit, Plux Crypto, and HTX.
On Tuesday, the agency filed a lawsuit against HTX, accusing it of promoting crypto services to UK residents, a spokesperson for the FCA confirmed to Cointelegraph. The FCA also stated:
Cryptocurrency companies must register with the FCA under anti-money laundering regulations and comply with the financial promotion rules that came into effect in the UK in 2023 to advertise or provide services to residents.
As the UK tightens its scrutiny of crypto companies, the country's regulators are also relaxing rules, lifting the ban on exchange-traded notes (ETNs) for cryptocurrencies and releasing a roadmap for tokenized investment funds to remain competitive with crypto-friendly countries like the United States.
Crypto companies advertising in the UK must meet strict standards to run crypto-related ads or promote digital assets in the country, primarily focused on consumer risk protection.
The FCA categorizes financial instruments into three risk levels, starting with readily realizable securities (RRS), which include publicly traded companies and are deemed to have the lowest risk with no marketing restrictions.
Restricted mass market investments (RMMI), which include most cryptocurrencies, are classified by the regulator as medium risk, allowing these investments to be marketed to the public under strict consumer protection guidelines.
These measures include prominently displayed speculative risk warnings, directing users to information pages and other reminders, as well as mandatory Know Your Customer requirements. These restrictions also limit the types of compensation or rewards offered to consumers to persuade them to use specific exchanges or services.
Executives of crypto companies violating UK advertising laws could face two years in prison and other legal sanctions.
However, according to the Financial Times, the harsh penalties have not deterred crypto advertising in the country. The media found that about half of all crypto ads flagged by the FCA remained online after receiving warnings between October 2023 and October 2024.
Related: The Crypto Market Under Multiple Bearish Pressures: ETF Inflows and Inflation Data in Focus
Original article: “UK Intensifies Crackdown: Hundreds of Crypto Exchanges Receive FCA Warnings in October”
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