FCA Cracks Down on Crypto Exchange HTX for Unapproved Promotions

The Financial Conduct Authority (FCA) has taken a significant step in regulating the cryptocurrency market by taking High Court action against HTX, a global crypto exchange. The FCA alleges that HTX promoted unapproved cryptocurrencies to UK consumers through various social media platforms and websites.

As part of its efforts to regulate the market, the FCA introduced rules in 2023 for the promotion of qualifying cryptoassets, which are defined as cryptographically secured digital representations of value or contractual rights. The rules require firms to use one of four lawful routes when communicating a crypto promotion to UK consumers.

The FCA's case against HTX centers on allegations of unapproved promotions, misleading marketing content, lack of consumer risk disclosures, and overseas operators targeting UK users. The regulator has demonstrated its willingness to litigate and use extraterritorial service tools to reach offshore entities, making this one of the most assertive interventions by the FCA to date against a global crypto firm.

The case highlights the importance of compliance with the FCA's rules for promoting qualifying cryptoassets. Firms must implement enhanced safeguards when promoting high-risk investments, including risk warnings and appropriateness assessments. The FCA has also warned that contracts entered into as a result of illegal financial promotions may be unenforceable against UK consumers.