2 October 2023
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The FCA’s final warning: why firms marketing cryptoassets and their payment service providers must understand the FCA’s new financial promotion rules

To The Point
(6 min read)

The FCA has issued a final warning letter to all firms marketing cryptoassets to UK consumers on the new financial promotions regime that comes into force on 8 October 2023. It is clear from the tone of this letter that full compliance is expected from day one, with the FCA signalling its readiness to take "robust action" against any non-compliant firm. Any intermediaries (such as payment service providers) who provide services to the cryptoassets sector should also pay careful attention to the new regime, as the FCA has emphasised those firms' obligations under the Proceeds of Crime Act 2002 where they help to facilitate the illegal marketing of cryptoassets to UK consumers.  With the deadline fast approaching, our FAQs are designed to help firms understand some of the key requirements under the new regime, and what the new rules mean for the industry.  

The FCA has issued a final warning to all firms marketing cryptoassets to UK consumers on the new financial promotions regime that comes into force on 8 October 2023.  The decision to issue a final warning and the tone of the FCA's communication is a clear signal to firms within scope that compliance will be expected, in full, from day one.

Under the UK's new financial promotion rules, anyone who markets cryptoassets to UK consumers in the course of business (including firms based overseas) must do so using one of 4 routes. These are:  

  1. The promotion is communicated by a UK-authorised firm;
  2. The promotion is made by an unauthorised firm, but approved by a UK-authorised firm;
  3. The promotion is made by or on behalf of a firm registered by the FCA under the UK's Money Laundering Regulations 2017; or 
  4. The promotion is covered by one of the exemptions in the Financial Promotion Order 2005. 

It's important to note that a firm only authorised under the Electronic Money Regulations or the Payment Services Regulations is not considered an authorised firm and cannot communicate or approve such financial promotions.

For firms who do not comply, the FCA has signalled its readiness to take "robust action", with risks of unlimited fines, prison sentences of up to 2 years, enforcement action, unenforceable contracts and websites or apps being taken down.  

In terms of the objectives, the inclusion of qualifying cryptoassets within the UK financial promotions regime is a key part of the emerging UK policy and framework for cryptoassets, focused on protecting consumers, and particularly vulnerable consumers, from harm.  We have seen some instant reactions to the new rules, including unregistered cryptoasset firms who have withdrawn from the UK market as a result.  Many others, however, are embracing the opportunity to put cryptoasset promotions on a more even footing.

Why should the payments sector take note?
Cryptoassets financial promotions – what you need to know
The key impacts

Next steps

If you would like to discuss the impact the new financial promotions regime will have on you, or if you would like strategic advice to help you prepare for the upcoming changes to the cryptoassets regulatory framework, please reach out to any of the contacts below. 

Harriet Territt >
Lisa Lee Lewis >
Nicola Bailey >
Sophie Skelton >

To the Point 

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