The FCA is to press ahead with tough new rules on cryptoasset product marketing from 8 October but will soften some of its deadlines.
The new rules are designed to make the marketing of cryptoasset products “clearer and more accurate,” the FCA said.
The rules will ban incentives such as ‘refer a friend’ bonuses and other incentives.
While the regulator has repeatedly warned investors to treat cryptoassets with great caution it accepts that many will invest in an area regarded by some as the ‘Wild West’ of investment.
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To ensure the new regime is properly bedded in the FCA says that in response to industry feedback it will consider giving cryptoasset firms more time to implement some of the planned changes, such as the 24-hour cooling off period on sales.
Firms could also be given until 8 January 2024 to introduce features that require “greater technical development” although the core rules will still come into effect from 8 October, it confirmed.
The watchdog said the rules were aligned with its regulatory approach taken last year when the FCA introduced rules for marketing of high-risk investments.
From 8 October, cryptoasset firms’ marketing must be ‘clear, fair and not misleading’, labelled with prominent risk warnings and must not inappropriately incentivise people to invest. These rules apply to firms wherever they are based globally, both in the UK and outside where they target UK investors.
Lucy Castledine, director of consumer investments at the FCA, said: “From this October, crypto firms must market to UK consumers clearly, fairly and honestly.
“And they must provide risk warnings people understand. 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.
She added: “We are concerned by the failure of many overseas and unregulated crypto firms to engage with us on the new rules. Come 8 October, we will be taking action against firms illegally marketing to UK consumers.”
The FCA said that anyone who continues promoting cryptoassets to UK customers past the October deadline without complying with the rules, may be committing a criminal offence punishable by an unlimited fine and/or up to 2 years imprisonment.
The FCA said it continues to remind people that purchasing cryptoassets remains high-risk and that they should be prepared potentially to lose all their money.
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