The UK’s Financial Conduct Authority (FCA) has yet to penalise any firms failing to remove illegal cryptocurrency promotions, despite only 54% of such content being taken down after the regulator’s intervention.
Between October 2023 and October 2024, the FCA issued 1,702 alerts targeting illegal crypto ads, apps, and websites, according to data obtained via a freedom of information request.
Struggles to Enforce New Crypto Advertising Rules
Under recently introduced laws, crypto advertisements in the UK must be approved by the FCA or an FCA-authorised entity. Non-compliance carries the risk of fines or criminal prosecution.
However, insiders reveal that the FCA has not yet utilised these powers. Instead, the regulator has focused on pursuing “finfluencers” — online influencers promoting unauthorised financial schemes.
In a notable case, the FCA charged nine individuals, including reality TV stars from Love Island and The Only Way Is Essex, for promoting high-risk financial products on Instagram. By October 2024, the watchdog was interviewing an additional 20 influencers under caution for illegal financial promotions.
Slow Progress in Addressing Non-Compliance
Although the FCA has touted its takedown alerts as a success, monthly data reveals that only about half of the flagged ads are consistently removed.
Legal experts suggest the FCA’s limited enforcement powers and reliance on voluntary compliance by tech platforms hinder its effectiveness.
Charles Randell, a former FCA chair, criticised the lack of penalties, arguing that visible legal action is necessary to compel compliance from both social media platforms and crypto exchanges.
He described the current situation as “very frustrating,” emphasising that without a credible threat of prosecution, little progress will be made.
Industry Frustration with Platform Accountability
The financial sector has expressed growing frustration over regulators’ inability to hold social media companies accountable for financial misconduct occurring on their platforms.
While the FCA has secured voluntary agreements from tech giants like Google, Meta, and Bing to ban unapproved crypto ads, these measures are non-binding.
Former FCA chair Randell highlighted the need for more robust measures, suggesting that regulators, including the FCA and Ofcom, may need to escalate enforcement efforts.
“When platforms are sufficiently motivated, they can and will block these ads,” he said, adding that regulatory pressure may be required to ensure compliance.
FCA’s Response and Future Actions
The FCA acknowledged the ongoing prevalence of online fraud and scams but maintained that “good progress” had been made in tackling the issue.
The regulator noted that many social media platforms have voluntarily banned unapproved paid-for financial adverts, and it continues to take action against rule-breakers.
Legal experts like Tim Fosh from Eversheds Sutherland argue that while the FCA’s alerts raise consumer awareness, a more systematic approach is needed to effectively combat crypto scams.
Until stronger enforcement mechanisms are introduced, the regulator’s efforts may fall short of significantly reducing illegal crypto promotions.
