The UK’s Financial Conduct Authority (FCA) has announced that it will give crypto firms an extended grace period to implement the required changes as it begins to enforce new regulations in the sector from October 2023.
In a statement released on September 7, 2023, the FCA noted it could extend the grace period from a 24-hour cooling-off period to as long as January 8, 2024, for affected businesses to get more time to develop the necessary technical features required to comply with the regulations.
The regulator, however, maintained that the core rules would still come into effect from October 8, 2023. Thus, affected businesses must apply to take advantage of this grace period.
The new rules were first announced in June 2023, and they target activities that promote cryptocurrency services to UK citizens. The new rules are against referral programs or offering “refer a friend” bonuses and any activity it deems could inappropriately incentivize individuals to invest in cryptocurrencies.
The regulations mandate any entity promoting cryptocurrencies to adhere to strict guidelines, including providing transparent risk warnings and ensuring their advertisements are clear, fair, and free from misleading information. Importantly, these rules apply to crypto businesses regardless of location as long as they provide services to UK citizens.
The financial regulator also requires crypto companies to verify the eligibility of individuals in terms of their knowledge and experience before allowing them to participate in crypto investments on their platforms.
The FCA highlighted the seriousness of non-compliance with these new rules, stating that violations constitute criminal offenses and could result in an unlimited fine and imprisonment for up to 2 years.
Lucy Castledine, FCA’s Director of Consumer Investments, explained the rationale behind the extended grace periods, stating:
“As a proportionate regulator, we’re giving firms that apply a little more time to get the other reforms requiring technology and business change right. We’ll maintain our close eye on firms during this extended implementation period.”
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