How to Kill the Industry with Easy Steps

As a lawyer (not you), I explain to the business a significant portion of my time and why they need to pour half of their budget into compliance. But even the bureaucratic maze I call my occupation has few have been as grandly counterproductive as the UK’s Financial Conduct Authority (FCA) or its Financial Promotion (FINPROM) code rules.

The following opinion editorial was written by Joseph Collection. Supreme Law Officer At bitcoin.com.

Introduced in October 2023, these rules are intended to protect consumers from misleading crypto ads. Sounds noble, doesn’t it? But in reality, they created a nightmare of compliance that throtts innovation, benefits established players, and pushes users onto dangerous offshore platforms that are likely to scamm.

Britain’s own Ministry of Truth

Let’s start with all Orwell’s aspects. The FCA requires that all communications deemed to be “financial promotion” be approved in advance by the Section 21 approvers. Yes, Crypto companies can no longer speak directly to their audience. They must first pass the message to a government-approved filter. Forget the free market. This is financial voice control, and it’s ridiculous enough to hear.

The lawyer is scratching his head

Worse, no one actually knows the full scope of what constitutes a “financial promotion.” In reality, businesses fear accidentally stepping on the line. Companies are currently playing a never-ending game of regulated mining sweeping power and are trying to guess which tweets, blog posts, or website updates could lead to fines and enforcement actions. The only certainty? The lawyer is killing.

And the madness doesn’t stop there. The FINPROM rule applies not only to companies that process transactions, but also to those who whisper the word “crypto” in the general direction of UK residents. Third-party publishers, influencers and even casual bloggers can get caught up in regulatory dragnets despite not taking part in financial transactions with British people. Congratulations if you’re tweeting, “Hey, check this crypto exchange.” It may be in violation of FCA rules.

Gifts for scammers and offshore platforms

There is then a so-called cooling period, forcing new users to wait 24 hours before being involved in the crypto platform. Ideas? To prevent impulsive decisions. Again, in theory it’s noble. reality? It only encourages people to bypass the system completely and sign up on unregulated platforms that do not impose these delays. Instead of protecting consumers, the FCA is essentially abandoning them straight into the arms of con artists.

The logistics burden is incredible for crypto companies that are actually trying to comply with it. Many people had to create UK-specific websites, social media channels and apps. This is an expensive and time-consuming process that does not serve any real purpose other than adequately raising lawyers and compliance consultants. Meanwhile, small startups (someone who are seriously trying to build useful and consumer-friendly products) are either drowning at legal costs or simply leaving the UK for good.

And that’s right away the real result of these rules. It’s not consumer protection. It’s not the integrity of the market. Less and fewer industries are involved in the fewer choices, higher costs, slowest, largest, most regulatory-loving companies. The exact opposite of what Crypto intended.

Who is actually winning here?

At this point, it certainly isn’t a UK consumer. UK consumers now have fewer legal options and more incentives to look for more risky alternatives. It’s certainly not a crypto startup. They are squeezed out before they even have the opportunity to prove themselves. The only real winner? Compliance consultants, lawyers (again, thank you for the business), and traditional financial institutions who want to see the code die rather than compete with it.

The outcome of this bureaucratic circus has already been unfolded. Many crypto companies seeking to serve UK customers have either left the region or have completely eliminated their expansion plans.

Don’t make any mistakes. It is likely that governments and regulators are taking notes everywhere, and if they learn something from the UK experiment, that shouldn’t be exactly what to do. The FCA has one simple question. Do you revise the course before it’s too late, or will you continue to serve as a warning story for other parts of the world?