UK issues final warning on "cryptocurrency advertising": Overseas companies must also register, violators face criminal penalties

The UK government issued a final warning to cryptocurrency firms, including those based overseas, on September 21, 2023, urging them to comply with the upcoming financial promotion regime. The purpose of this regime is to protect consumers from inappropriate cryptocurrency investments and ensure that operators provide fair and accurate information.

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UK Financial Conduct Authority: Committed to Consumer Protection

This new regime will apply to all companies and will be consistent with regulations for other high-risk investments. The Financial Conduct Authority (FCA) has begun engaging with companies to provide necessary support to ensure their compliance with the new regime.

Unregistered Companies Could Face Criminal Sanctions

Of over 150 cryptocurrency firms investigated, only 24 responded to the FCA, with many unregistered overseas companies showing low levels of engagement, causing some concerns.

Once the new regime is in effect, unauthorized and unregistered companies engaging in financial promotions in violation of the rules will face severe penalties, including potential criminal offenses, imprisonment, fines, and enforcement actions.

Intermediaries Responsible for Preventing Illegal Cryptocurrency Advertisements

The FCA believes that intermediaries such as social media platforms, app stores, and payment companies play a crucial role in preventing illegal promotions.

These entities must consider their obligations under the Proceeds of Crime Act 2002 and the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, while the upcoming Online Safety Bill will also impose more responsibilities on search engines and social media companies.

Measures and Expectations Post-Implementation of the Regime

Following the implementation of the regime, unregistered cryptocurrency firms must cease illegal financial promotions to UK consumers and must have systems in place to prevent UK consumers from being exposed to unauthorized promotions. Companies found in violation will be required to cease or block illegal promotions and seek legal advice. The FCA will take action against offending companies and expects all stakeholders to play a role in protecting UK consumers.