The UK’s financial regulator is extending the deadline for some crypt oasset companies to adhere to stricter marketing regulations.
New UK regulations set to kick in next month will require crypto firms to make their marketing clear, fair and prominently labeled with risk warnings. They will also prohibit incentive schemes such as ‘refer a friend’ bonuses.
The Financial Conduct Authority (FCA) earlier mandated that crypto firms must comply with these new advertising regulations by October.
On Thursday, the regulator said that companies may have until Jan. 8, 2024, to implement more technically demanding features such as a cooling-off period. Such a period might allow consumers a certain timeframe to reconsider their investment decisions without penalties.
“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 investment, said in a statement.
“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. We’ll maintain our close eye on firms during this extended implementation period.”
The FCA’s regulations target the ways companies disseminate information about their crypto offerings through websites, apps, social media and online ads.
Companies located outside the UK, but whose ads target UK residents, will also need to adhere to these guidelines.
Castledine noted that the FCA is concerned about the lack of engagement from many foreign and unregulated crypto firms regarding the new regulations.
After the regulations take effect on Oct. 8, crypto companies will have four legal avenues for marketing to UK consumers, including obtaining regulatory approval or qualifying for exemptions.
The FCA classified crypto asset firms under its “high-risk investments” category only last year, citing the volatile price fluctuations of cryptoassets as a key indicator of risk.
The watchdog has previously cautioned that individuals should only invest in crypto assets if they fully grasp the associated risks and are willing to lose their investment.
Failure to adhere to the regulations after Oct. 8 could result in criminal charges, potentially leading to an unlimited fine or jail time.
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