UK Financial Conduct Authority’s Clampdown on Unregistered Cryptocurrency Companies
The Financial Conduct Authority (FCA) in the UK has recently intensified its oversight of cryptocurrency activities within the country. As part of this effort, the regulator has issued over 1,000 notifications to unregistered cryptocurrency firms operating in the UK following the implementation of new financial promotion regulations. These regulations mandate that cryptocurrency exchanges must secure an FCA license to conduct business in the UK and engage with its residents.
Enhanced Enforcement by the FCA
Lucy Castledine, the FCA’s director of consumer investment, highlighted the agency’s proactive stance in a recent interview. The FCA’s focus is on companies offering services without proper registration, leading to significant penalties. Castledine mentioned that 48 applications were removed from the UK app store as a result of these actions. Furthermore, the FCA is collaborating with social media platforms to ensure the removal of any content that promotes illicit activities in the cryptocurrency market.
Consequences of Non-Compliance and Recent Fines
Recent guidelines from the FCA underscore the inevitable nature of complying with promotional regulations. Companies are required to accurately categorize consumers as restricted, high net worth, or certified sophisticated investors before disseminating financial promotional materials. While many firms adhere to these guidelines by allowing consumers to self-identify, some may mislead individuals on how to proceed.
Emphasizing the risks associated with non-compliance, the FCA imposed a $4.5 million fine on Coin Library, a cryptocurrency exchange branch based in the UK. The penalty stemmed from a breach of commitments made under a consent order related to the user registration process. CB Payments Ltd. (CBPL), linked to the US-based company Coinbase, vowed not to onboard consumers labeled as “high risk” by the FCA. This incident underscores the FCA’s commitment to ensuring regulatory compliance to safeguard consumers and the market.
Also read: UK Law Commission Proposes Cryptocurrency as Personal Property
