The UK regulatory body for financial markets, the Financial Conduct Authority (FCA), has recently beefed up its supervision of cryptocurrencies. After new financial promotion rules came into force, the regulator has sent more than 1,000 notices to instances of unregistered cryptocurrency companies operating in the UK. These rules require cryptocurrency exchanges to get the FCA license to operate in the UK and deal with its residents.
UK FCA Cracks Down on Unregistered Crypto Firms
In an interview, Lucy Castledine, the FCA’s director of consumer investments, stressed the agency’s preemptive role. The FCA has focused on firms that offer services without being registered, which has led to serious penalties. According to Castledine, 48 apps were pulled out from the UK app stores due to these initiatives. Also, the FCA works with social media to ensure they take down any content promoting illicit activities in the crypto market.
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The recent guidelines issued by the FCA are indicative of the fact that compliance with the promotional rules is inevitable. It mandates companies to correctly categorize the consumer as restricted, high net worth, or certified sophisticated investors before sending out financial promotions. While many companies adhere to this by giving the consumers the freedom to choose, others have erred by guiding them on what to identify themselves as to be allowed to proceed.
Emphasizing the risks of non-fulfillment of the given requirements, the FCA levied a $4.5 million penalty on Coinbase’s cryptocurrency exchange UK-based branch. This penalty was in relation to a violation of a commitment made under a consent order relating to user sign-up procedures. CB Payments Ltd. (CBPL), a company linked to Coinbase, a U.S.-based company, had undertaken that it would not accept consumers classified as ‘high risk’ by the FCA. This event also evidences the FCA’s determination to ensure that regulatory requirements are adhered to safeguard the consumers and the market.
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