Regulators Struggle as 50% of Banned UK Crypto Ads Remain Online

Nearly half of the illegal crypto ads flagged by the UK’s Financial Conduct Authority (FCA) continue to linger online, highlighting the regulatory body’s ongoing battle to protect consumers from the crypto industry’s darker corners.

• 50% of banned crypto ads still accessible
• FCA targets influencers, not companies
• Reliance on tech platforms’ voluntary cooperation
• Bitcoin’s volatility amidst regulatory challenges

From October 2023 to October 2024, the FCA identified 1,702 illegal crypto ads, apps, and websites. Yet, only 54% of these were removed, leaving the rest still accessible to the public. What’s a “crypto ad”? It’s any promotion that offers to buy, sell, or invest in cryptocurrencies, and they must be approved by the FCA or an authorized firm to be legal. This regulatory gap is a clear sign of the challenges in keeping pace with the fast-moving crypto world.

Despite having the authority to fine or prosecute, the FCA has not yet pulled the trigger on any company. Instead, it’s turned its attention to social media influencers, or “finfluencers” (think financial influencers), who often promote high-risk financial products without disclosing the risks involved. The FCA interviewed 20 influencers under caution—a formal warning that their statements could be used in court—and charged nine in a criminal case linked to risky financial products, often pushed by stars from reality TV shows like Love Island and The Only Way Is Essex.

New rules introduced in March aimed to tighten the reins on social media promotions, but the FCA’s enforcement power is limited. It can’t legally force tech giants like Google, Meta, and Microsoft’s Bing to take down unapproved ads. Instead, it relies on these platforms to play nice and remove them voluntarily, a strategy that’s been about as effective as trying to herd cats.

The UK’s journey with cryptocurrencies began with Bitcoin’s debut in 2013. Since then, regulatory efforts have ramped up, from anti-money laundering rules in 2018 to banning crypto derivatives for retail investors in 2020 and mandatory registration for crypto firms in 2021. These steps show a growing awareness of the risks, but also the struggle to keep up with technology that moves at the speed of light.

Amidst all this regulatory drama, Bitcoin has been on a wild ride, hitting seven all-time highs in the previous year, peaking at around $108,400 before settling at $93,772. This rollercoaster of price movements underscores the urgency of effective regulation, yet also highlights the challenges of regulating a market that thrives on volatility and disruption.

“Between October 2023 and October 2024, the watchdog flagged 1,702 illegal crypto ads, apps, and websites. Yet only 54% of these vanished from the internet.”

Steve Smart, joint executive director of enforcement and market oversight at the FCA, emphasized the importance of influencers checking the products they promote to avoid breaking the law and risking their followers’ financial well-being. It’s a necessary pivot in a landscape where traditional regulatory tools are falling short. But it’s also a double-edged sword; while the focus on influencers is a step in the right direction, it leaves the bigger fish—companies—largely untouched.

The FCA’s reliance on voluntary cooperation from tech platforms is akin to hoping a cat will voluntarily take a bath. It’s a strategy that’s bound to leave you drenched in frustration. Meanwhile, the focus on influencers, while commendable, raises questions about the effectiveness of current regulatory frameworks. Are we barking up the wrong tree by not tackling the root of the problem—the companies behind these ads?

For crypto enthusiasts, this regulatory tug-of-war is both a wake-up call and an opportunity. It’s a reminder to stay vigilant against scams and to educate yourself on navigating this new financial frontier. Yet, it’s also a chance to advocate for more effective and nuanced regulations that can support the growth of this revolutionary technology without stifling innovation.

As the crypto market continues to evolve, the FCA’s struggle is a microcosm of the global challenge to balance innovation with consumer protection. The road ahead is fraught with complexity, but it also holds the promise of a more secure and inclusive financial future. If we can get the regulations right, we might just see a world where the power of decentralization and privacy isn’t just a dream, but a reality for everyone.

Key Takeaways and Questions

• What percentage of illegal crypto ads remain online despite being flagged by the FCA?

  Nearly 50% of the flagged ads remain accessible online.

• What has the FCA done in response to illegal crypto ads?

  The FCA has focused on social media influencers, interviewing 20 under caution and charging nine in a criminal case, but has not fined or prosecuted any companies directly.

• Why has the FCA struggled to enforce the removal of illegal crypto ads?

  The FCA relies on voluntary cooperation from tech platforms and lacks the legal authority to force the removal of unapproved ads.

• How has the UK’s approach to cryptocurrency regulation evolved over the years?

  From initial recognition in 2013, the UK increased regulatory scrutiny with anti-money laundering rules in 2018, banning crypto derivatives for retail investors in 2020, and mandating company registration in 2021.

• What recent market performance was highlighted in relation to Bitcoin?

  Bitcoin reached seven all-time highs in the previous year, peaking at around $108,400, and was valued at $93,772 at the time.

• What can consumers do to protect themselves from illegal crypto ads?

  Consumers should be cautious of ads promising high returns with little risk, verify the legitimacy of promotions, and be aware of the FCA’s warnings.

• How might future regulations impact the crypto market in the UK?

  More stringent regulations could enhance consumer protection and market stability, but there is a risk of stifling innovation if not balanced properly.