The Financial Conduct Authority (FCA) has released updated guidance for cryptocurrency firms, emphasizing the need to comply with new financial promotion regulations that came into effect in October 2023. This regulatory framework aims to ensure that crypto firms provide clear and accurate information to potential investors about the risks associated with crypto assets.
In its recent review, the FCA assessed how well firms were adhering to key requirements such as personalized risk warnings, the 24-hour cooling-off period, client categorization, and appropriateness assessments.
The review involved examining a selection of firms, including those registered under anti-money laundering regulations and those authorized to approve promotions for unregistered firms. The FCA’s findings revealed both commendable practices and significant shortcomings. While some firms demonstrated effective compliance, others failed to meet the necessary standards.
The FCA noted instances where firms relied too heavily on industry benchmarks rather than engaging directly with the regulator to improve their practices. The guidance emphasizes that firms must develop robust systems and controls to meet regulatory requirements, including the financial promotions regime.
The FCA has urged all firms to review the new guidance and integrate its recommendations into their compliance strategies. For those falling short, the FCA warns that failure to improve could result in regulatory action. Moving forward, the FCA will continue to support the crypto industry in adapting to these regulations and ensuring higher standards across the sector.
