The FCA is taking a cautious approach to crypto regulation with its new financial promotions regime, which will apply to crypto assets starting October 8, 2023.
In a move to regulate the marketing of crypto assets in the UK, the financial regulator outlined several legal routes for firms to promote these products to consumers in a July 4 letter.
Companies that want to advertise crypto assets to consumers in the UK have three options: register with the FCA’s MLRs, be authorized by the FCA, or get approval from a specifically authorized individual.
The FCA has outlined three legal routes for businesses to promote crypto assets to UK consumers, but businesses that do not use any of these routes must comply with the exemption provisions under the Financial Services and Markets Act 2000 Financial Promotion Order 2005.
To prevent customers from being duped or defrauded, a new financial promotional framework for crypto assets has been established. The regime will require cryptocurrency companies to use precise risk disclaimers and positive friction in their advertising and to make sure that their marketing is honest, upfront, and not deceptive.
The regulator also warned that those who break the rules could be placed on a warning list, have their illegal financial promotion removed and blocked, and even face lawsuits.
The regulator’s warning was clear: not only would defaulters be punished, but their illegal financial promotion would also be removed and blocked, and they could even face lawsuits.
Firms that market to UK residents are not required to be registered in the UK, but they must still comply with the financial promotion regime.
The FCA has advised companies that it may take up to three months for them to consider their application for registration.