Monday, August 12, 2024 – The UK’s Financial Conduct Authority (FCA) has become the first major regulator to introduce specific rules for cryptocurrency firms. The new regulations, announced on August 8, aim to protect consumers investing in cryptocurrencies.
The assessment of the operations of the firms was outlined in the publication of “good and poor practices” which contribute to upscale the performance in the crypto industry to meet essential standards.
The individual feedback was provided to the firms assessed under the FCA regulation framework to overlook the requirements that needed to be made and altered.
It is mandatory to verify the investor status (high-net-worth, sophisticated, or restricted) prior to the product’s promotion to secure the consumer.
The rules will be implemented for those who are incapable of handling significant losses, limiting ordinary investors to allocating 10% as the maximum.
The compliance of firms with potential in regulatory systems would be leveled up by engaging with FCA’s new findings.
In June 2023, FCA unveiled financial promotion rules for crypto assets covering the key areas of 24-hour cooling-off period, personalized risk warnings, client categorization, and appropriateness assessment, naming them as back-end rules extensively supporting crypto firms to drive on the right track.
