Lynn Johannson, Advisor, Sustainability and ESG
January 4th, 2024
Lynn Johannson, President of E2 Management Corporation and Catalyst for THE Collaboration
In a care[...]
CFA Stops Rebuildingsociety’s Binance Crypto Promotions
Regulation | Oct 11, 2023
Image: Unsplash/Markus Winkler
The Financial Conduct Authority (FCA) has halted rebuildingsociety.com, a peer-to-peer platform, from approving financial promotions for Binance and other crypto asset firms.
The FCA has been unyielding in its regulatory stance, particularly towards cryptocurrency promotions. A recent statement from the FCA reveals that 146 alerts were issued about cryptoasset promotions on the first day of the new regime alone. The regulatory body expects various businesses, including social media platforms, app stores, and search engines, to heed these alerts and play a pivotal role in shielding UK consumers from illegal promotions.
See: FCA’s Expectations for UK Cryptoasset Businesses and the Travel Rule
The FCA’s New Crypto Marketing Regime
Since October 8, 2023, firms aiming to promote cryptoassets in the UK are mandated to be authorized or registered by the FCA, or have their marketing approved by an authorized firm.
The FCA’s rules necessitate that promotions be clear, fair, and not misleading, and must be accompanied by prominent risk warnings. Furthermore, they should not improperly incentivise individuals to invest. This regulatory shift aligns cryptoassets with other high-risk investments and applies to all firms marketing cryptoassets to UK consumers, irrespective of the firm’s geographical location or the technology utilized for promotion.
Binance and Rebuildingsociety.com Partnership Under Scrutiny
Binance, despite being unregulated in the UK, announced a new domain for UK users and declared that rebuildingsociety.com would be responsible for approving its marketing and communication materials. However, the FCA’s intervention has cast a shadow over these plans.
See: SEC Accuses Binance.US of Not Cooperating With Investigation as Executives Exit
Binance has emphasized its substantial investment in ensuring compliance with the FCA's rules and highlighted that their agreement with Rebuildingsociety.com was shared with the FCA well before the enforcement of the updated Financial Promotions Regime.
Rebuildingsociety.com, on the other hand, has expressed its commitment to exceeding regulatory requirements and safeguarding consumers. Despite its waiver request for additional compliance time being rejected, the platform plans to appeal against the FCA’s restrictions and the waiver request denial.
Navigating Regulatory Waters
The FCA’s robust action and the new financial promotion rules for cryptoasset promotions are in alignment with its core commitments to reduce and prevent serious harm, set and test higher standards, and promote competition and positive change, as laid out in the 2023/24 Business Plan.
See: FCA Uses New Tools to Catch 14X more Mis-leading Ads than Last Year
The ongoing situation serves as a reminder for platforms operating in this sphere, emphasizing the necessity to remain abreast of regulatory developments and to ensure that operations are in strict compliance with the prevailing norms.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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