Crypto firms braced for FCA clampdown on rogue marketing tactics
Crypto firms are braced for a clampdown as the UK’s financial services regulator rolls out a swathe of new rules designed to stamp out rogue marketing tactics in the industry.
The new measures, announced by the the Financial Conduct Authority (FCA) in June, include banning refer a friend bonuses and introducing a “cooling-off” period, where first time investors will have to wait a full day before they can complete their transaction.
The move was described by analysts at the time as an attempt to give consumers “extra protection in the crypto Wild West”.
Most of the new rules come into effect on Sunday, meaning officials will technically be able to take action against wayward actors from Monday.
But the FCA has offered some breathing space for some crypto firms on a few of the more cumbersome rules, including the cooling-off period. They will have until the 8th January to implement those changes.
Lawyers said that the new framework will require a major shift in strategy for many crypto firms.
“The UK has not just moved the goal posts, it has picked them up and put them in a different field,” said Bradley Rice, financial regulatory partner at law firm Ashurst.
“Implementing these changes requires significant legal, compliance, marketing, engineering and senior management engagement and oversight, and so it’s not a surprise the FCA has had to agree to waivers to firms who have not been able to achieve that in the time,” he added.
Charles Kerrigan, head of crypto and digital assets at law firm CMS, said, however, he expects the regulator to take action soon.
“The regulator is getting new powers and intends to use them,” Kerrigan told City PM “The FCA has been communicating with the industry for months to stress that it is serious about firms complying with the rules from the moment they apply.”
The moves to rein in the crypto industry’s marketing strategies comes as part of a wider clampdown on the sector by the FCA this year as the industry is brought into its remit.
Until recently, crypto firms were only regulated to ensure they are compliant with anti-money laundering regulations. But the passing of the Financial Services and Markets Act earlier this year is set to give the watchdog even greater powers to discipline the sector.