The U.K. crypto industry has welcomed a government decision to introduce a bespoke exemption for crypto companies looking to advertise to local customers. But the country’s financial regulator is a bit more cautious.
As part of the government’s plans to bring crypto promotions into the scope of regulations, a new rule added to the Financial Services and Markets Act moving through Parliament included restrictions on who gets to approve crypto ads. The requirement would have meant most crypto firms “will not be able to communicate their own promotions, unlike other financial services firms” which are authorized “by virtue” of having other relevant permissions, the U.K. Treasury said on Wednesday, but the exemption (which is not in effect yet) announced on Tuesday means crypto companies can approve their own promotions for the time being.
Feedback from the industry made it clear that not many qualified people would have been willing to approve crypto ads, and the government's plan would have amounted to “an effective ban,” the Treasury said.
“I think that was a great win for the industry. I've lobbied for this and I know some of my clients have, industry bodies have and I think we got exactly what we asked for,” said Diego Ballon Ossio, a senior associate at U.K.-based law firm Clifford and Chance. Ian Taylor, director at lobby group CryptoUK and Mark Aruliah, senior policy adviser at Elliptic echoed this.
Not everyone welcomes the Treasury’s exemption. Given the Financial Conduct Authority’s (FCA) increasing focus on consumer protection “it is hard to see how the regulator could ever agree to this,” said James Alleyne, legal director at Kingsley Napley, who worked at the FCA previously in an emailed statement.
A new set of much-anticipated regulatory plans published by the Treasury on Wednesday could make it mandatory for crypto firms to be authorized by the Financial Conduct Authority (FCA). For now, firms have to apply for FCA registration under its anti-money laundering regime.
But registration isn’t exactly a walk in the park either. The FCA has only approved 14% of the registrations it received from crypto businesses, and is known for being critical of crypto, unlike the U.K.’s Conservative government, which has repeatedly stated its desire to turn the country into a crypto hub.
“We will publish our final rules for crypto asset promotions when the relevant legislation is made. We expect to take a consistent approach to that taken for other high-risk investments,” an FCA spokesperson told CoinDesk in an emailed statement. “Crypto assets are high risk and anyone who purchases them should be prepared to lose all their money.”
The government has “taken the hard decision to listen to the industry,” regardless of what the regulator thinks, Aruliah said.
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