Emily Walker
The UK’s Financial Conduct Authority (FCA), responsible for overseeing financial activities, is encountering difficulties in tackling illegal cryptocurrency advertisements. From October 2023 to October 2024, the FCA identified 1,702 instances of such ads across websites and apps, but only managed to remove 54%. This leaves almost half still active and potentially deceiving investors, as reported by the Financial Times.
The FCA possesses the power to regulate these advertisements and can pursue legal action against those breaching a new law aimed at cleaning up the chaotic crypto market in the UK.
As per the latest regulations, the FCA is empowered to review and approve crypto-related advertisements before they appear online. However, the FCA has not fully implemented these measures, raising significant doubts about the effectiveness of its regulatory role.
FCA Targets ‘Finfluencers’ Over Major Crypto Enterprises
Despite the rise in questionable ads within the UK’s crypto landscape, the FCA’s enforcement appears lacking. Some analysts suggest that the authority has redirected its focus towards regulating “finfluencers,” individuals who promote crypto ventures via social media, rather than tackling larger crypto companies directly. These influencers, particularly active on platforms like Twitter/X, frequently share posts meant to persuade their followers to invest.
Recently, the FCA took action against nine individuals who were promoting a non-authorized business selling high-risk derivatives on Instagram. The authority has also pursued complaints against reality TV personalities known from shows like The Only Way is Essex and Love Island.
In October 2024, the FCA announced investigations into 20 additional influencers engaged in the illegal marketing of financial products.
Challenges with Enforcing Unauthorized Crypto Ads
While influencers face scrutiny, numerous crypto firms are evading legal repercussions. Commentators point out that the FCA struggles to take legal action against them.
The underlying issue with the FCA’s enforcement stems from existing regulations, which limit its ability to compel tech companies to promptly remove unauthorized crypto ads.
These companies can only be encouraged to remove such content voluntarily. However, some tech firms, like Meta, Google, and Bing, have agreed to assist in removing these ads. This has led some crypto businesses to exploit the FCA’s limitations, operating with little fear of sanctions.
Emergence of the UK Crypto Sector
The cryptocurrency sector in the UK had a modest beginning in 2013, with only a handful of startups recognizing its potential. By the following year, the UK Treasury acknowledged the rapid growth of this market, producing studies on digital currencies and the need for oversight.
In 2017, the topic of crypto regulation gained traction, prompting the FCA to caution the public about the risks associated with investing in crypto assets.
In 2018, the UK government initiated discussions about regulating the sector while fostering innovation. By 2021, rules were established requiring cryptocurrency companies to register before they could legally operate.
Image sourced from Pexels, chart data from TradingView.