According to the United Kingdom's financial watchdog, newly proposed advertising rules in the United Kingdom could potentially see executives of crypto firms facing up to two years in prison for failing to meet certain requirements around promotion. These executives would be in violation of the rules if they failed to meet any of the aforementioned requirements.
The United Kingdom's Financial Conduct Authority (FCA) issued a statement on February 6 in which it revealed that if the proposed "financial promotions regime" is approved by Parliament, then all crypto firms within the country as well as those located outside of it would be required to adhere to certain requirements when advertising their crypto services to customers in the United Kingdom.
According to the Financial Conduct Authority (FCA), "cryptoasset enterprises selling to UK customers, including those operating abroad, must be ready for this regime."
"Taking immediate action will assist guarantee that they can continue to lawfully advertise their products to customers in the United Kingdom." As a part of their preparations, we strongly advise businesses to get any and all guidance that may be required," the statement said.
If the FCA's proposed regulatory framework is implemented, companies dealing in cryptocurrencies would be required to get prior authorisation from the FCA before advertising their services, unless they qualified for an exemption under the Financial Promotion Order.
According to the governing body, a "cryptoasset firm" in the United Kingdom may only advertise and sell its products and services to clients via one of the following four channels:
According to the regulatory body, any marketing that is carried out outside of these channels would be in violation of the Financial Services and Markets Act of 2000 (FSMA), which has a criminal penalty of up to two years in jail for each offence.
"We will take tough action where we detect companies advertising cryptoassets to UK consumers in contravention of the rules of the financial promotions regime," the Financial Conduct Authority (FCA) stated in a statement. "We will take action against firms that promote cryptoassets to UK consumers."
Companies found to be in violation of the new regime risk having their websites taken down, receiving public warnings, and being subjected to further enforcement measures. In addition to the possibility of serving time in jail for its executives.
The Financial Conduct Authority (FCA) has said that they would wait until "necessary legislation" is passed before publishing "our final guidelines for crypto asset promotions." This might perhaps indicate that the financial promotions regime will undergo upgrades or adjustments in the future.
According to the Financial Conduct Authority (FCA), "Subject to any changes in circumstances, we plan to adopt a similar approach to crypto assets to that outlined in our new regulations, which will be in force from February 1 2023 for other high-risk investments."