FCA has published a letter to cryptoasset firms marketing to UK consumers on complying with the expanded financial promotions regime set to apply from 8 October 2023.
The letter comes after the FSM Bill received Royal Assent and the Government has therefore now legislated to bring qualifying cryptoassets with the scope of the framework. It sets out the broad and “technologically neutral” nature of the “financial promotion” definition, which applies even if the promotion is not solely targeted at UK consumers. FCA expects that most, if not all, cryptoasset firms with UK retail customers will be within scope.
FCA highlights the four routes for lawfully communicating financial promotions to UK consumers:
- The promotion is communicated by an authorised person;
- The promotion is made by an unauthorised person but approved by an authorised person;
- The promotion is communicated by a cryptoasset business registered with FCA under the MLRs; and
- The promotion otherwise complies with the conditions of an exemption in the FPO.
It also stressed that promotions not made using one of these routes will be in breach of section 21 FSMA, a criminal offence punishable by up to 2 years imprisonment, an unlimited fine, or both. FCA warned that it would be taking robust action against those illegally promoting to UK consumers. This will include, but is not limited to, placing firms on its warning list, requesting takedowns of websites, social media accounts, apps and all other promotions that are in breach, and enforcement action.
FCA called upon unregistered or unauthorised cryptoasset firms marketing to UK consumers to:
- Consider which of the above routes they will use to make their financial promotions, how they will meet the requirements of that route and the associated FCA rules;
- Carefully consider how they will deal with UK customers if they are unable to communicate financial promotions to them; and
- If they decide to no longer provide services to UK customers, to have in place orderly wind-down plans to minimise any impact on UK consumers.
To help it understand what steps cryptoasset firms are taking to prepare for the updated regime, FCA asks that firms respond to its survey by 4 August 2023.