The Financial Conduct Authority (FCA) published today Policy Statement PS23/6 introducing new financial promotion rules for cryptoassets, together with relevant draft guidance under Guidance Consultation GC23/1.
Cryptoassets are classified as Restricted Mass Marketed Investments (RMMI) which means that they can be marketed to consumers subject to restrictions. The rules are designed to ensure that consumers understand the relevant risks when buying crypto. Among other things, firms will need to ensure that customers have the appropriate knowledge and experience before investing, put in place clear risk warnings and ensure marketing communications are clear, fair and not misleading, in accordance with the FCA requirements. The draft guidance sets out in more detail the FCA’s expectations in this regard. Incentives such as ‘refer a friend’ bonuses will be prohibited. There will also be a 24-hour cooling-off period. The draft guidance focuses on business models that the FCA has identified as being more high-risk, including algorithmic stablecoins as well as borrowing, lending and staking.
In practice there will be four avenues for communicating financial promotions relating to cryptoassets in the UK:
- Financial promotions communicated by an UK-authorised person;
- Financial promotions approved by an UK-authorised person, but communicated by an unauthorised person;
- Financial promotions communicated by cryptoasset business registered with the FCA under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs);
- Financial promotions falling under an applicable exemption under the Financial Promotion Order.
The new regime will come into force on 8 October. There will also be a 4-month implementation period. The Guidance Consultation will be open for feedback until 10 August 2023.
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