Currently, any firm authorized by the Financial Conduct Authority (FCA) can approve any financial promotion from an unauthorized firm, but the system is not working properly, the ministry said.
The ministry is proposing a “regulatory gateway” to pre-vet an authorized firm that wants to give the nod to marketing material from an unauthorized financial services firm.
“Any firm wishing to approve the financial promotions of unauthorized firms would first need to obtain the consent of the FCA,” the ministry said in a statement.
Britain also proposes to extend the FCA’s “perimeter” to bring the promotion of some types of crypto-assets under its wing for the first time.
“It is the government’s assessment that many of these unregulated crypto-assets expose consumers to unacceptable levels of risk,” the finance ministry’s consultation paper said.
“The crypto asset proposals are not surprising and deal another nail into the coffin of illegitimate ICOs (initial coin offerings), which have lost their shine since the heydays of 2018,” said Bradley Rice, senior associate at law firm Ashurst.
Huge amounts of consumer money now flow into cryptocurrencies, often advertised on social media and almost entirely out of the reach of the FCA, said Matt Hopkins, head of the fintech at accountants BDO.
“Regulation will make it much more difficult for crypto businesses to access investors who may not understand the risks they are taking,” Hopkins said.
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