The UK's financial regulator FCA has not penalized companies that failed to remove illegal cryptocurrency advertisements. Previously, after the FCA requested their removal, half of the banned promotional activities remained online.
According to data obtained through a freedom of information request, from October 2023 to October 2024, only 54% of the 1,702 alerts issued by the FCA resulted in the removal of illegal cryptocurrency advertisements, apps, or websites. The regulator can impose fines or initiate criminal proceedings against groups that violate the new law. The relevant rules require cryptocurrency advertisements to obtain authorization from the FCA or FCA-authorized businesses before publication, or they will face the 'severe' actions promised by the regulator.
However, sources familiar with its procedures say that the FCA has not yet used any new powers and is instead focusing on 'finfluencers,' or key opinion leaders in the financial sector who promote such schemes online. It has initiated criminal proceedings against 9 individuals, accusing them of promoting unauthorized schemes related to high-risk derivatives on Instagram, including TV stars known for the reality shows 'Love Island' and 'The Only Way Is Essex.'
Last October, the FCA stated that it was interviewing another 20 finfluencers who had been warned for illegally peddling financial services products.
Former FCA chairman Charles Randell stated that penalizing companies that refuse to remove content is crucial for reducing non-compliance: 'Ultimately, unless these (tech) platforms and authorized cryptocurrency exchanges that publish non-compliant ads face very real threats of legal action, we are unlikely to see any change.'
It is understood that the FCA does not have the power to require online platforms to remove unapproved content and instead relies on good faith negotiations with technology platforms.
Tom Fosh from law firm Eversheds Sutherland stated that simply issuing alerts to combat cryptocurrency scams still helps raise consumer awareness. (FT)