FCA Seeks Crypto Firms' Preparedness for Upcoming Promotions Regime

The UK's financial market supervisor, the Financial Conduct Authority (FCA), announced on Monday that all local and overseas crypto companies marketing to UK consumers must comply with the country's upcoming new financial promotions regime.

FCA Warns "Robust Action" for Breaches

The financial market watchdog ordered cryptic companies to prepare for the upcoming rules. Additionally, the regulator warned of "robust action" for the promotional rules breaches, which will include takedowns of websites that are in violation, issuing public warnings, and enforcement action.

"Acting now will help ensure they can continue to legally promote to UK consumers. We encourage firms to take all necessary advice as part of their preparations," the FCA stated.

Initially, the UK proposed to bring legislation around the promotions of specific crypto assets within the FCA's remit with a consultation response published in January 2022. The UK government issued a consecutive policy statement on 1 February 2023 on its approach to crypto asset financial promotions regulation.

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Four Routes of Crypto Promotions

The new proposed regime will allow the promotion of crypto assets to UK consumers under four categories: it should be communicated by an FCA-authorised person, the FCA must approve any unauthorized person promoting crypto assets, crypto businesses registered under the MLRs with the FCA must promote services, and crypto companies qualified under a Financial Promotion Order can promote services.

Without following these four specified routes, crypto assets promotions in the country would be a criminal offence punishable by up to 2 years imprisonment.

Moreover, the FCA clarified that any company authorized under the Electronic Money Regulations or the Payment Services Regulations would be considered "authorized" for running crypto asset promotions.

"We will publish our final rules for crypto asset promotions once the relevant legislation has been made. Subject to any changes in circumstances, we expect to take a consistent approach to crypto assets to that taken in our new rules, in place from 1 Feb 2023, for other high-risk investments. This would mean firms being required 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 clear, fair and not misleading," the FCA stated.

Most recently, the FCA revealed that it rejected 8,582 financial promotions in 2022, seeking their removal or amendment. Furthermore, it published over 1,800 scam alerts last year to protect investors against fraudsters.