The love-hate relationship between the cryptocurrency space and the United Kingdom continues, as the government now sets its sights on ads in the industry. Earlier this week, the U.K. Treasury Department issued a set of new proposals, hoping to bring ads in the crypto space under the jurisdiction of financial regulators.
Improved Clarity for Consumer Protection
If approved, the proposals will give the U.K.’s Financial Conduct Authority (FCA) oversight of ads for specific cryptocurrency types. Speaking on their impact, John Glen, the U.K.’s Economic Secretary to the Treasury and City Minister, explained that it would curb the proliferation of false and misleading ads.
“It’s important that people can understand the financial products they see promoted. If adverts by unauthorised firms are misleading, or don’t fully outline the risks, then people can end up losing money.”
Glen adds that the move isn’t to stifle the crypto space’s growth or consumers’ access in any way. Instead, it will protect consumers in the industry — while also broadening their access to these assets.
The U.K. currently has a set of rules that protect consumers from misleading promotional material for financial products. Essentially, any unauthorized company that seeks to promote an instrument or product will need to get approval from an authorized counterpart.
However, the government is now concerned that the proliferation of different financial instruments could render these safeguards mute. To continue protecting consumers, the requirements will need to evolve too.
As the proposals explain, authorized firms in the U.S. will need to get explicit consent from the FCA before they can grant their approval to their unauthorized counterparts. This way, the FCA will be able to access the promotional material, thus achieving greater oversight.
The government believes that the move could bring ads in the crypto space to the same standards of fairness as those in the traditional financial space. Amongst other things, these standards prioritize clarity, fairness, and accuracy.
The FCA’s Sweeping Crypto Oversight
Policing ads appears to be the latest approach by the FCA to ensure holistic crypto regulation. The agency has taken a hands-on approach to regulation since January, when it announced that it would monitor all Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) procedures for crypto-related companies.
The statement included the FCA’s requirements for crypto businesses. Those included the identification and analysis of all CTF and AML risks, policies to control and eliminate these risks, and due diligence and implementation measures.
Late last month, the financial watchdog stepped up its enforcement by reminding all crypto businesses in the country to register with it by June 30. The FCA added that failure to register by the deadline would exclude violating firms from operating in the U.K. for the next year. Violating companies that are already running will need to close their operations.
As the agency pointed out, the close deadline was to help it review all applications and make the required approvals. However, some companies will be able to return upon the agency’s request to explain their operations and plans to ensure compliance with its guidelines.
The agency also called on traditional financial and Fintech firms that deal in cryptocurrencies to submit their applications. The requirement was in line with the Financial Services and Markets Act 2000, Electronic Money Regulations 2011, and the Payment Services Regulations of 2017.