FCA warns of common issues with crypto marketing

Financial watchdog the Financial Conduct Authority warned about common issues with crypto marketing on Wednesday after a change in legislation brought cryptoasset promotions under its remit.

From 8 October, the FCA has been supervising firms against a new regime that was designed to give consumers the right information and risk warnings, stating it now expects authorised firms approving the financial promotions of cryptoasset firms to "take their regulatory obligations seriously".

"Where this is not happening, we will take action and have already placed restrictions on an authorised firm to restrict it from approving cryptoasset financial promotions," warned the FCA.

The watchdog noted three common issues with cryptoasset financial promotions - including promotions making claims about the 'safety', 'security' or ease of using cryptoasset services without highlighting the risk involved, risk warnings not being visible enough due to small fonts, hard-to-read colouring or non-prominent positioning, and the fact that firms have failed to provide customers with adequate information on the risks associated to specific products being promoted.

"We are working with businesses including social media platforms, app stores, search engines and domain name registrars to remove or block illegal promotions. We are also working with payments firms to limit UK consumer exposure to firms issuing illegal promotions. These businesses should consider the alerts we have issued and play their part in protecting UK consumers," said the FCA.

"We are also continuing to identify and act against firms that are illegally promoting cryptoassets to UK consumers. Since the regime went live, we have issued 221 alerts. This list will be continually updated as we identify firms which may be illegally communicating cryptoasset promotions and are failing to engage with us constructively."

The FCA added that even with the new marketing rules, cryptoassets still remain high-risk and were largely unregulated and warned that if "something goes wrong", it was unlikely that people would have access to consumer protections and "should be prepared to lose all their money".

Reporting by Iain Gilbert at Sharecast.com