The UK’s Financial Conduct Authority (FCA) has pushed back the deadline for cryptoasset firms to implement certain rule changes to their crypto marketing processes.
In a new update Thursday, the watchdog clarified that the core crypto marketing rules including the ban on incentives like referral bonuses will come into effect from Oct. 8. Only new firms will get more time to introduce features “that require greater technical development.”
“Firms must first apply for the flexibility which would then allow them time to make the required back-office changes successfully,” FCA wrote.
This includes a 24-hour cooling-off period for new customers, which means crypto firms must wait for a day when a new customer makes a purchase before sending them any offers.
Starting October 8, UK customers will have more protection as crypto marketing by companies “must be clear, fair and not misleading.” The cryptoasset firms must carry appropriate risk warnings rather than inappropriately incentivizing people to invest, the new tighter rules say.
“From this October, crypto firms must market to UK consumers clearly, fairly and honestly. And they must provide risk warnings people understand,” Lucy Castledine, Director of Consumer Investments at FCA, noted. “As a proportionate regulator, we’re giving firms that apply a little more time to get the other reforms requiring technology and business change right.”
The tightening of rules comes as a response to the failure of many overseas and unregulated crypto firms, Castledine added.
Crypto companies that breach the new rules and do not comply past the October 8 deadline, will be committing a criminal offense and will have to face unlimited fines and/or up to 2 years imprisonment, the financial regulator noted.
UK Among Top Global Crypto Hubs
The country is one of the fastest growing global crypto hubs. According to FCA research, the ownership of digital assets in the UK has doubled between 2021 and 2022.
Furthermore, FCA received around 300 registration applications from crypto firms since 2020, but it is important to note that the regulator approved only 13% of the total applications.
Per recent reported by Cryptonews, FCA said that only 38 applications have scaled through the registration process. However, a majority of firms voluntarily withdrew their filings as the body encourages resubmissions if the requirements are not met at the time of filing the application, it added.
The body has refused 5 applications due to non-compliance of the firm with the money laundering, terrorist financing, and transfer of funds, the stats added.
Early this week, FCA that crypto firms are expected to “take all reasonable steps” to comply with the Travel Rule and that the companies are solely responsible for compliance.