The Financial Conduct Authority, the UK’s financial watchdog, is facing challenges enforcing its rules on illegal crypto advertisements. Despite reporting 1,702 illegal cryptocurrency ads, websites and apps between October 2023 and October 2024, only 54% have been removed online, with almost half of them still active and attracting potential investors or victims without distrust, revealed the Financial Times.
The FCA has the power to regulate these advertisements and take criminal action against individuals or groups who violate a new law aimed at remedying the disorder in the country’s crypto markets.
Current rules allow the FCA to review and approve such crypto-related advertisements or activities before publishing or distributing them online. Despite this new rule and regulatory powers, the FCA has failed to fully implement them, raising serious concerns about the capabilities of its supervisory body.
FCA focuses on “influencers”, rather than big crypto companies
Although the UK crypto market has seen questionable advertising and marketing recently, the FCA has failed to fully implement the law. According to some observers, the government watchdog has instead focused its resources on regulating “finfluencers” or individual financial influencers who promote crypto projects and businesses. Many of these influencers are active on social media, particularly Twitter/X, and often post tweets and marketing messages aimed at convincing their followers to invest.
Most recently, the FCA filed complaints against nine individuals who marketed an unauthorized business involving high-risk derivatives on Instagram. The watchdog has also made complaints against TV stars who became popular on reality shows like The Only Way is Essex and Love Island.
In October 2024, the FCA announced it was investigating a further 20 influencers who were illegally marketing financial products.
Some platforms get away with unauthorized crypto ads
As social media influencers are targeted, many crypto companies are skirting the laws. And according to commentators, the FCA is finding it difficult to pursue and file complaints against them.
The reason for the inaction or lack of initiative of the monitoring body can be attributed to the existing laws. Under current rules, the FCA cannot legally force these tech companies to instantly remove these unapproved cryptocurrency ads.
The decision to remove these advertisements must be voluntary. The good news is that some tech companies like Meta, Google, and Bing have agreed to remove these ads. And some crypto companies and operators know that the watchdog’s hands are tied and there is little they can do about the situation.
UK sees growing crypto niche
The UK cryptocurrency niche got off to a slow start in 2013. Initially, there were a few tech and crypto startups, and only a few saw the potential of the technology. After a year, the UK Treasury began to note the rapid growth of the sector by publishing research on digital currencies and the need for oversight and regulation.
And in 2017, the issue of crypto regulation began to gain mainstream attention. Meanwhile, the FCA came on the scene and warned the UK investing public of the dangers of crypto investing.
Then, the following year, the British government launched consultations to obtain information on how to regulate an industry while promoting innovation. And by 2021, the UK required cryptocurrency companies to register first before they can operate legally.
Featured image from Pexels, chart from TradingView
