Emma RadmoreFCA has set out its expectations in advance of the rules on advertising of crypto products coming into force on 8 October. The rules are specifically designed to make marketing clearer and more accurate and to ban practices such as “refer a friend” incentive bonuses. While FCA is willing to engage with firms potentially to allow more time (until January 2024) to implement some changes such as those on cooling off periods which will require technical work to complete, it expects to see engagement from all firms, and will require firms to show what they are doing to prepare, in order for FCA to consider giving them this extra flexibility. It is concerned at the current lack of engagement from many overseas and unregulated firms.
It has written to firms it thinks will need to comply with the rules explaining the changes and what they will need to do to get the modification by consent, and also set out a list of good and poor practices it has noticed in the run up to implementation. The main challenges have been:
- the “back end” work, like preparing for the 24 hour cooling off period and appropriateness assessment which are requiring significant system builds and operational changes;
- for firms in global groups, working out how to apply the UK standards effectively;
- firms discovering they have not properly appreciated the broad scope and nature of the financial promotion regime; and
- firms failing fully to consider how certain rules apply to the specifics of the cryptoasset services they provide.