Tightening regulations on the promotion of cryptocurrency products
The UK’s Financial Conduct Authority (FCA) has announced on the 4th that businesses promoting crypto assets (virtual currencies) to customers in the UK will have to comply with existing rules on financial product promotion by 8 October 2023. announced that there is
This comes after the UK government enacted legislation to make cryptocurrencies subject to financial promotion schemes. It applies to all companies selling cryptocurrencies to UK consumers, including those based abroad.
Websites, mobile apps, social media posts, and online advertising will also be regulated under the regime.
The scheme imposes several conditions on the advertising of products. For example, it stipulates what a person with certain authority or qualifications should do, or what a company that is registered with the FCA and complies with the Money Laundering, Terrorism Financing and Money Transfer Regulations (MLR) should do.
If a company that does not meet these conditions conducts a promotion, it will be punishable by up to two years in prison or a fine for violating the Financial Services Market Act.
In addition, even if the conditions are cleared and the promotion is carried out, it must comply with the rules separately established by FCA.
The rules impose requirements that eligible promotions be fair, clear and not misleading. Furthermore, the disclosure of risks to consumers and the establishment of a cooling-off system are required.
In May, Sarah Pritchard, head of market supervision, policy and competition at the Financial Conduct Authority (FCA), said of the increased regulation of advertising:
We will target companies marketing to UK consumers. Monitor companies that do not comply with regulations and seek legal enforcement action where necessary.
In the UK, the promotion of high-risk financial products is to be accompanied by warning statements such as “This is a high-risk investment and you must understand the risks involved.” Similar rules will apply to virtual currencies going forward.
UK pushes cryptocurrencies and Web3
Under Prime Minister Rishi Sunak, who is positive about cryptocurrencies, the UK is also making progress in developing related regulations.
On June 29, an amendment to the Financial Services and Markets Bill was approved to regulate cryptocurrencies as financial instruments.
The bill would also include oversight of cryptocurrency advertising, a registration system for companies, and the ability to regulate stablecoins as a means of payment in the UK.
connection: UK approves bill to regulate cryptocurrencies
In the UK, the “Department for Science Innovation and Technology” was newly established in February, and it is reported that it will explore investment opportunities and business strategies related to the Metaverse (virtual space) and Web3. By the way.
connection: UK’s newly established “Ministry of Science, Innovation and Technology” to promote Web3 and Metaverse = report
What is Web3
The current centralized web is defined as Web2, and refers to an attempt to realize a non-centralized network using blockchain. A typical feature is the use case of decentralized networks such as blockchain, such as access to dApps using virtual currency wallets.
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