The U.K.’s financial watchdog says cryptocurrency companies still aren’t following the country’s new advertising law.
The Financial Conduct Authority (FCA) noted the need for compliance Wednesday (Feb. 14) in a report that examines the regulator’s efforts to enforce restrictions on illegal financial promotions that went into effect last October.
The rules require crypto companies to be registered with the FCA, or have their ads — which must be “clear, fair and not misleading” — approved by authorized companies. In addition, companies are required to note the risks of investing in cryptocurrencies, and to offer a 24-hour cooling off period for first-time customers.
According to the report, the FCA issued 450 consumer alerts between Oct. 8 — when the rules became official — and Dec. 31. The authority also says it is working with tech companies to remove and block illegal promotions.
So far, its work has led to 35 apps being pulled from app stores as of the end of last year. The authority promised “robust action” against companies issuing illegal financial promotions.
“We remain concerned that regulated firms are not doing enough to meet their own obligations when providing support services, such as payment services, to crypto firms that are illegally promoting to UK consumers,” the report said.
“We are engaging with these firms to remind them about their regulatory obligations including, but not limited to, carrying out appropriate due diligence on their clients, KYC checks and ensuring that they are not dealing with the proceeds of crime.”
The FCA says it has also been focusing on companies trying to capitalize on the trend of consumers seeking loans or other help with debts. The authority says it has seen an increased use of TikTok and sponsored advertising to pull in vulnerable consumers to engage in discussions on managing debt, which goes beyond the scope of the law.
“Consumers are then typically steered towards an Individual Voluntary Arrangement (IVA) solution that may not be suitable to their circumstances, and in some cases, unauthorized firms are going further in engaging (or falsely claiming to engage) directly with creditors or lenders on behalf of consumers to negotiate their debts,” the report said.
Among the companies impacted by last year’s changes was the Binance-affiliated peer-to-peer platform rebuildingsociety.com, which was blocked in October from approving financial promotions for Binance and other crypto firms just days after the two companies announced their partnership.
