The UK's Financial Conduct Authority (FCA) is stepping up its efforts to observe the crypto industry by issuing warnings to unregistered exchanges and taking legal motion against corporations that serve UK residents or promote digital assets within the country.
The FCA issued a whole bunch of warnings in October about unlicensed crypto exchanges, including Elite Bit Markets, Nexure Gainbit, Plux Crypto and HTX.
On Tuesday, the agency filed a lawsuit against HTX for promoting crypto services to UK residents, an FCA spokesperson confirmed to Cointelegraph. The FCA also said:
“We have seen crypto firms respond positively to our financial promotion rules and regulations. However, if we still see poor practices, we won’t hesitate to take motion if firms seem like violating our rules.”
Crypto corporations should be registered with the FCA under anti-money laundering regulations and comply with UK financial promotion rules, which got here into force in 2023, to advertise to or provide services to residents.
The UK's renewed scrutiny of crypto corporations got here at a time when the country's regulators were easing rules by lifting the ban on crypto exchange-traded notes (ETNs) and releasing a roadmap for tokenized investment funds to stay competitive with crypto-friendly countries resembling the US.
FCA publishes roadmap for crypto regulations. Source: UK FCA
The UK has strict regulations governing crypto corporations’ promoting services
Crypto corporations promoting within the UK must meet strict criteria to run crypto-related advertisements or promote digital assets within the country, with a give attention to protecting consumer risks.
The FCA categorizes financial instruments into considered one of three risk areas, starting with Readily Realizable Securities (RRS), including listed corporations, which the regulator says pose the bottom risk and should not subject to marketing restrictions.
Restricted Mass Market Investments (RMMI), which incorporates most cryptocurrencies, are classified by the regulator as having a medium risk profile, allowing the investments to be marketed to the general public under strict consumer protection guidelines.
These include prominently displayed speculative risk warnings, directing the user to information pages and other prompts designed to warn the user and indicating mandatory know-your-customer requirements.
The restrictions also limit the form of compensation or rewards offered to consumers to encourage them to make use of a specific exchange or service.
Crypto company executives who violate UK promoting laws face two years in prison and other legal sanctions.
However, in accordance with the Financial Times, the heavy fines haven’t stopped crypto promoting within the country.
The outlet noted that around half of all crypto promoting reported by the FCA between October 2023 and October 2024 remained online despite warnings.
