The Financial Conduct Authority (FCA), an independent financial regulatory body in the United Kingdom, has released a comprehensive report outlining its actions against financial promotions, specifically focusing on advertisements related to cryptocurrencies.
In its report published on February 14th, the FCA stated that it had discovered “significant levels of non-compliance” with the crypto promotion rules that were implemented on October 8th, 2023. The regulator conducted reviews of both registered and unregistered crypto firms and identified several common issues.
One of the main problems identified was the use of generic risk summaries without any modifications for product-specific risks, such as stablecoins or asset-backed coins. Additionally, the FCA found that firms were using their regulated status in a promotional manner. Furthermore, the regulator expressed concern that firms were making claims about the safety, security, and ease of use of crypto services without providing any supporting evidence or adequately highlighting the associated risks.
The FCA warned firms that it would take action against persistent breaches of the rules and would resort to enforcement actions if necessary. Between October 8th and December 31st, 2023, the FCA issued 450 consumer alerts against digital asset companies that were illegally promoting cryptocurrencies. The regulator emphasized its intention to continue taking action against firms issuing illegal promotions in 2024. Furthermore, the FCA expressed concerns about regulated firms failing to meet their obligations when providing supporting services to crypto firms that were illegally promoting products to UK consumers.
In addition to its actions against crypto promotions, the FCA also reported that it had ordered the withdrawal or modification of over 10,000 finance-related advertisements in the UK in 2023.
The FCA highlighted that it received more than 24,000 reports on potential unauthorized businesses in 2023. The agency stated that these reports were escalated when credible evidence of a breach was found, and it encouraged consumers to continue reporting misleading advertisements and potential scams through its official channels.