All cryptoasset firms marketing to UK consumers, including firms based overseas, will need to comply with the UK financial promotions regime from 8 October 2023. We explain how your firm must get ready now.
The Government is bringing promotions of certain cryptoassets within our remit. The financial promotions regime will apply to all firms marketing cryptoassets to UK consumers regardless of whether the firm is based overseas or what technology is used to make the promotion.
The definition of a financial promotion[1] is broad and applies to a wide range of communications made by a firm including its website, mobile apps, social media posts and online advertising.
Communication routes
When the regime comes into force on 8 October 2023 there will be 4 routes to lawfully communicate cryptoasset promotions to UK consumers:
- The promotion is communicated by an FCA authorised person.
- The promotion is made by an unauthorised person but approved by an FCA authorised person. Legislation is currently making its way through Parliament which, if made, would introduce a regulatory gateway[2] that authorised firms will need to pass through to approve financial promotions for unauthorised persons.
- The promotion is communicated by a cryptoasset business registered with the FCA under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs)[3].
- The promotion otherwise complies with the conditions of an exemption in the Financial Promotion Order[4].
For these purposes, a firm only authorised under the Electronic Money Regulations, or the Payment Services Regulations is not considered an ‘authorised person’ and so cannot communicate or approve financial promotions. This is set in legislation and cannot be modified by FCA rules.
Promotions that are not made using one of these routes will be in breach of section 21 of the Financial Services and Markets Act 2000 (FSMA), which is a criminal offence punishable by up to 2 years imprisonment, an unlimited fine, or both.
Promotions communicated through routes 1, 2 or 3 need to comply with FCA rules. See our rules for cryptoasset financial promotions in PS23/6[5].
We have taken a consistent approach to cryptoassets to that taken for other high-risk investments. This requires firms to use specific risk warnings and positive frictions (such as a 24-hour cooling off period) in their consumer journeys, in addition to the overarching requirement that their promotions are fair, clear and not misleading.
We have also published Finalised Guidance for cryptoasset financial promotions (FG23/3)[6] which provides information on, and sets out our expectations of, the communication and approval of financial promotions for qualifying cryptoassets.
Complying with the new rules
We've also announced a modification to our financial promotion rules. This modification is available to MLR registered firms and authorised firms. Details on the modification and how firms can apply for it are set out in our supervisory letter (PDF)[8].
We will take robust action where we see firms promoting cryptoassets to UK consumers in breach of the requirements of the financial promotions regime. This may include, but it is not limited to, placing firms on our Warning List[9], requesting take downs of websites in breach, and taking enforcement action.
Cryptoassets remain high risk. Even when this regime comes into force the market will be largely unregulated. We've repeatedly warned that consumers should be prepared to lose all of their money if they buy cryptoassets. Consumers should not expect to be compensated under the Financial Services Compensation Scheme if things go wrong.