Cryptoasset firms must comply with FCA financial promotions regime

As of 8th October 2023, all cryptoasset firms marketing to UK consumers must comply with the Financial Conduct Authority’s (FCA) financial promotions regime. This means that all promotions must be fair, clear, and not misleading, and must include specific risk warnings.

There are four ways for cryptoasset firms to lawfully market to UK consumers:

1. The promotion is communicated by an FCA authorised person.
2. The promotion is made by an unauthorised person but approved by an FCA authorised person.
3. 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).
4. The promotion otherwise complies with the conditions of an exemption in the Financial Promotion Order.

The FCA has published detailed guidance on the rules for cryptoasset financial promotions, which can be found on its website.

Here are some of the key requirements for cryptoasset financial promotions:

• Promotions must be fair, clear, and not misleading. This means that they must not exaggerate the potential benefits of investing in cryptoassets or downplay the risks.
• Promotions must include specific risk warnings. These warnings must be clear and prominent, and must explain that cryptoassets are high-risk investments and that consumers could lose all of their money.
• Promotions must not be targeted at vulnerable consumers. This includes consumers who are under the age of 18, consumers who have mental health problems, and consumers who are in financial difficulty.
• Promotions must not be misleading about the FCA’s authorisation or endorsement of cryptoasset firms.

Cryptoasset firms that fail to comply with the FCA’s rules could face a number of sanctions, including fines, imprisonment, or even a ban from operating in the UK.

If you are unsure whether or not your promotions comply with the FCA’s rules, Jeremy Gordon can provide expert advice informed by extensive previous experience among our team of FCA enquiries ( including those by its Financial Promotions and Enforcement Taskforce) and at the regulator itself (as a senior lawyer in the Enforcement division).

It is important to note that the FCA’s financial promotions regime does not apply to cryptoassets themselves. However, the FCA has warned that cryptoassets are high-risk investments and that consumers should be prepared to lose all of their money.