The UK's Financial Conduct Authority will tighten rules on unauthorized cryptocurrency promotions. The government proposed several measures to regulate these businesses like traditional financial firms.
The financial watchdog announced Monday that firms that fail to follow the new regime would face prison sentences. This goes hand in hand with the news that US companies will not be allowed to operate in the country.
We know that the past 2022 caused a huge domino effect. 3AC went down, LUNA collapsed, FTX exploded, BlockFi, and many others followed suit. This chain reaction caused regulatory institutions in the US and Europe to take action. The UK refuses to be left behind — thus, it will tighten the existing regulations.
The regulation is quite simple: a company can only promote crypto projects with governmental approval. And foreign companies are not exempt.
If a company doesn't promote crypto within the parameters for promotion, it will be a punishable offense. It can face up to two years in jail — once the regulations come into force.
Promotions must be transparent and fair due to the high volatility that defines the market. Customers even have a 24-hour cooling-off period to avoid unnecessary purchases.
Regulations take time to be approved. Yet, the FCA clarified that the final rules would be published when the relevant legislation has been circulated.
Would this threaten the decentralization of cryptocurrencies and their commercialization? The answer is not very clear at the moment. We will have to wait for the regulation to come to find out. The plan is to avoid an FTX-like misfortune and create trust for customers — only time will tell whether the UK achieved its goal.