Crypto firms must be authorised by or registered with the
Financial Conduct Authority or have their marketing approved.
TLW Solicitors welcomes the Government’s introduction of a new financial promotions regime to clamp down on unscrupulous cryptocurrency firms. By law, any firm wanting to promote cryptocurrency assets in the UK, that is not already authorised or regulated by the Financial Conduct Authority (FCA), must now have their marketing approved by another authorised firm. Marketing materials must be “clear, fair and not misleading”.
The FCA is the UK’s financial services watchdog and maintains a register of firms authorised to carry out regulated financial activities. It also issues warnings about firms that are not authorised to operate in the UK and encourages all consumers to consult both lists before investing.
Since the new rules came into force on 8th October 2023, the FCA has been quick to add unauthorised crypto firms to the warning list, with an update on its own website saying it added 146 firms in the first 24 hours alone!
Good news for investors
+ −The new rules are certainly good news for cryptocurrency investors. There are many different cryptocurrencies on offer and their value can fluctuate wildly. In the past, it has been difficult to know which firms could be trusted; many unsuspecting investors have been lured in by genuine-looking adverts, on sites like Meta’s Facebook or Instagram, promising guaranteed or high returns. Often the adverts have been placed by scammers who want to collect contact details, so they can target their victims directly.
Read more about cryptocurrency scams here and learn how to spot the signs of one here.
As the promotion of crypto assets usually appears on websites, in printed literature, or through social media posts and online adverts, the following firms are all expected to take note of the FCA’s warnings issued and take steps to protect consumers:
- Crypto businesses
- Social media platforms
- App stores
- Search engines
- Domain name registrars
- Payment firms
Marketing materials must be clearly labelled with risk warnings so that would-be investors can assess whether the investments are suitable. And crypto firms will no longer be able to offer incentives such as referral bonuses. Similar changes were implemented by the FCA in August 2022 in relation to other high-risk (non-crypto) investments.
What happens to firms that don’t comply?
+ −Many unregulated firms are based overseas. Some companies, including one called Bybit, have already stopped offering services in the UK, in an attempt to stay on the right side of the FCA’s guidelines. Bybit is also encouraging UK investors to wind down their investments by 8th January 2024, the end of a transition period put in place by the FCA for firms to make the necessary changes to how they work. Disappointingly, a significant number of other cryptocurrency firms contacted by the FCA failed to engage with them in the months leading up to 8th October.
The penalties for not complying with the new regime are significant. The FCA has confirmed that any unregistered firm or individual continuing to promote crypto assets could be subject to up to 2 years in prison, an unlimited fine, or both.
TLW Solicitors’ view
+ −Sarah Spruce, who heads up the Fraud and Scams team at TLW Solicitors, welcomes the news and says:
“Many people see investing in cryptocurrency as the ‘next big thing’ and hope to ‘get rich quick’. Unfortunately, we are contacted by victims of crypto fraud on a regular basis after they realise they have been duped and their money has disappeared. These new rules mean that investors have more protection through the financial services regulator, the FCA. That in turn opens the doors to getting help from the Financial Ombudsman Service (FOS) or the Financial Services Compensation Scheme (FSCS) if things go wrong. FOS was set up over 20 years ago to settle disputes between customers and regulated financial firms and the FSCS is there to support people financially if their FCA-registered financial provider goes out of business. Previously, there was very little protection for crypto investors and little hope of recovering any lost money.
“If you or a loved one have lost money as a result of a suspected crypto scam, please get in touch with TLW Solicitors and we’ll discuss your case, including whether there is the basis of a ‘no win, no fee’ claim. These are challenges that fraud victims should not have to deal with alone.”
Cryptocurrency Fraud Compensation – TLW Solicitors can help
+ −Cryptocurrency scams are a type of Authorised Push Payment Fraud, which can be sophisticated and highly credible. Please don’t feel embarrassed if you or a loved one have become the victim of a scam; get in touch and have a confidential chat about the different options for getting your money back.
Your bank has a duty of care to protect you and your money from fraud or scams. Taking a complaint to your bank is often the first step, and we can help you navigate the process. The team at TLW Solicitors has many years’ experience in bank negligence claims.
If a claim against your bank is unsuccessful, we can advise whether or not to ask the Financial Ombudsman Service to look into your case. We understand the legal jargon, the paperwork required, the time limits imposed, and the appeals process should it be required.
We work on a no-win, no-fee basis, meaning that, if we take on your case and it is unsuccessful, you do not pay us anything.
Contact us by calling 0800 169 5925, email us at info@tlwsolicitors.co.uk or complete one of the forms below.
It is important to get advice as soon as possible, as strict time limits can apply.
Minimum case values apply.
Meet Our Team
Meet Sarah, who heads up our experienced Cryptocurrency Fraud Claims team.
Sarah and her colleagues are on hand to help with your claim.
