The UK’s Financial Conduct Authority (FCA) is ramping up its push to police the crypto industry, issuing warnings to unregistered exchanges and seeking legal action against companies serving UK residents or promoting digital assets in the country.
The FCA issued hundreds of warnings against unlicensed crypto exchanges in October, including Elite Bit Markets, Nexure Gainbit, Plux Crypto and HTX.
On Tuesday, the agency filed a lawsuit against HTX for promoting crypto services to UK residents, a spokesperson for the FCA confirmed to Cointelegraph. The FCA also said:
“We have seen crypto firms react positively to our financial promotions rules and regulations; however, where we still see poor practices, we will not hesitate to take action where firms appear to be breaching our rules.”
Crypto companies must be registered with the FCA under money laundering regulations and comply with the UK’s financial promotions rules, which took effect in 2023, to advertise or provide services to residents.
The UK’s renewed scrutiny of crypto companies came amid regulators in the country easing rules by lifting the ban on crypto exchange-traded notes (ETNs) and publishing a roadmap for tokenized investment funds in a bid to remain competitive with crypto-friendly countries like the US.
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The UK maintains strict regulations on crypto companies advertising services
Crypto companies advertising in the UK must meet strict criteria to run crypto-related advertisements or promote digital assets inside the country, centered around consumer risk protections.
The FCA categorizes financial instruments in one of three risk buckets, starting with Readily Realizable Securities (RRS), including publicly traded companies, which the regulator says carry the least risk and feature no marketing restrictions.
Restricted Mass Market Investments (RMMI), which includes most cryptocurrencies, are classified by the regulator as having a medium risk profile, allowing the investments to be marketed to the public under strict consumer protection guidelines.
These include conspicuously posted warnings about speculative risk, which direct the user to informational pages and other prompts designed to alert the user and mandated know-your-customer requirements.
The restrictions also limit the type of compensation or rewards offered to consumers to persuade them to use a particular exchange or service.
Executives at crypto companies that violate the UK’s advertising laws could face two years behind bars and other legal sanctions.
However, the stiff penalties have not stopped crypto advertisements in the country, according to the Financial Times.
The outlet found that about half of all crypto advertisements flagged by the FCA between October 2023 and October 2024 remained online despite warnings.
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