FCA: Crypto Firms Face “Significant Challenges” Ahead of Financial Promotions Regime

As the clock ticks toward the implementation of thecrypto asset financial promotions regime on October 8, 2023, the UK’s FinancialConduct Authority (FCA) has engaged in a diverse range of regulated crypto assetfirms to assess their readiness.

According to thewatchdog, some firms have overlooked the broad aspect of financial promotions,focusing primarily on traditional advertising and neglecting the content oftheir digital promotions. According to theFCA, the definition offinancial promotion is broad, encompassing websites, blogs, mobile apps, andvarious forms of content.

The FCA has observedthat compliance with the regime’s territorial scope for firms operatingglobally can be a complex challenge. In light of this, the best-prepared firmshave established clear controls, implementing geo-blocking and KYC/AML measuresto prevent consumers in the UK from accessing promotions intended for other markets.

“The use of socialmedia to promote financial services, including crypto assets, presents someparticular issues and challenges,” the FCA stated. “In July 2023, weissued GC23/2 consulting on updated guidance on financial promotions on socialmedia. We recommend that all crypto asset firms intending to promote to consumers in the UK consider this proposed guidance.”

Additionally, theregulator has found out that some firms aim to boost brand awareness throughsports sponsorship deals, like partnerships with UK-based companies. In lightof this, the FCA has warned that companies should be cautious as any financialpromotion rules apply to brand advertising beyond specific categories.

Crypto Asset Firms Planfor Implementation

The UK’s financialsector authority has emphasized the need for clear accountability amongcrypto asset firms ahead of the new regime. It stated that thebest-prepared firms have designated senior individuals, like CEOs or COOs, withoverall responsibility for compliance

. In contrast, the least prepared firmshave distributed responsibility among multiple individuals, leading toconfusion.

Creating precise formatsfor risk warnings remains a work in progress for many firms. Compliance withprominence requirements, such as the positioning of risk warnings and font sizeselections, is important according to the FCA. Prepared firms have examples ofhow risk warnings will be presented, ensuring a customer-friendly approach.

Meanwhile, Finance Magnates reported aboutthree weeks ago that the FCA had set clear expectations for crypto businessesoperating in the UK regarding compliance with the TravelRule. Starting fromSeptember 1, 2023, crypto enterprises in the country are required to adhere to theTravel Rule, which mandates the collection, verification, and sharing ofimportant information related to the transfer of crypto assets.

As the clock ticks toward the implementation of thecrypto asset financial promotions regime on October 8, 2023, the UK’s FinancialConduct Authority (FCA) has engaged in a diverse range of regulated crypto assetfirms to assess their readiness.

According to thewatchdog, some firms have overlooked the broad aspect of financial promotions,focusing primarily on traditional advertising and neglecting the content oftheir digital promotions. According to theFCA, the definition offinancial promotion is broad, encompassing websites, blogs, mobile apps, andvarious forms of content.

FCA Defines Financial Promotions Regime

The FCA has observedthat compliance with the regime’s territorial scope for firms operatingglobally can be a complex challenge. In light of this, the best-prepared firmshave established clear controls, implementing geo-blocking and KYC/AML measuresto prevent consumers in the UK from accessing promotions intended for other markets.

“The use of socialmedia to promote financial services, including crypto assets, presents someparticular issues and challenges,” the FCA stated. “In July 2023, weissued GC23/2 consulting on updated guidance on financial promotions on socialmedia. We recommend that all crypto asset firms intending to promote to consumers in the UK consider this proposed guidance.”

Additionally, theregulator has found out that some firms aim to boost brand awareness throughsports sponsorship deals, like partnerships with UK-based companies. In lightof this, the FCA has warned that companies should be cautious as any financialpromotion rules apply to brand advertising beyond specific categories.

Crypto Asset Firms Planfor Implementation

The UK’s financialsector authority has emphasized the need for clear accountability amongcrypto asset firms ahead of the new regime. It stated that thebest-prepared firms have designated senior individuals, like CEOs or COOs, withoverall responsibility for compliance

. In contrast, the least prepared firmshave distributed responsibility among multiple individuals, leading toconfusion.

Creating precise formatsfor risk warnings remains a work in progress for many firms. Compliance withprominence requirements, such as the positioning of risk warnings and font sizeselections, is important according to the FCA. Prepared firms have examples ofhow risk warnings will be presented, ensuring a customer-friendly approach.

Meanwhile, Finance Magnates reported aboutthree weeks ago that the FCA had set clear expectations for crypto businessesoperating in the UK regarding compliance with the TravelRule. Starting fromSeptember 1, 2023, crypto enterprises in the country are required to adhere to theTravel Rule, which mandates the collection, verification, and sharing ofimportant information related to the transfer of crypto assets.

Read More

Share:

Leave a Reply

Your email address will not be published. Required fields are marked *

Search this website