The UK’s Financial Conduct Authority (FCA) is stepping up its efforts to police the crypto industry, issuing warnings to unregistered exchanges and seeking legal action against companies that serve UK residents or promote digital assets in the country.
The FCA issued hundreds of warnings against unlicensed crypto exchanges in October, 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 cryptocurrency companies react positively to our financial promotion rules and regulations; however, where we still see bad practices, we will not hesitate to take action when companies appear to be breaking our rules.”
Cryptocurrency companies must be registered with the FCA under anti-money laundering rules and comply with UK financial promotions. standardswhich came into effect in 2023, to advertise or provide services to residents.
The renewed scrutiny of cryptocurrency companies by the United Kingdom came amid the country’s regulators relaxing rules by lifting a ban on cryptocurrency exchange-traded notes (ETNs) and publishing a roadmap for tokenized investment funds in a bid to remain competitive with cryptocurrency-friendly countries like the United States.
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UK Maintains Strict Regulations on Crypto Firms’ Advertising Services
Cryptocurrency companies advertising in the UK must meet strict criteria to run cryptocurrency-related ads or promote digital assets within the country, focused on protecting consumer risks.
The FCA classifies financial instruments into one of three risk groups, starting with readily realizable securities (RRS), including listed companies, which the regulator says carry the lowest risk and have no trading restrictions.
Restricted Mass Market Investments (RMMI), which include most cryptocurrencies, are classified by the regulator as having a medium risk profile, allowing the investments to be marketed to the public under strict consumer protection guidelines.
These include conspicuously posted warnings about speculative risk, directing the user to informational pages and other prompts designed to alert the user, and mandatory “know your customer” requirements.
Restrictions also limit the type of compensation or reward offered to consumers to persuade them to use a particular exchange or service.
Crypto company executives who violate UK advertising laws could face two years in prison and other legal penalties.
However, the harsh sanctions have not stopped crypto announcements in the country. according to the Financial Times.
The outlet found that about half of all crypto ads flagged by the FCA between October 2023 and October 2024 remained online despite the warnings.
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