FCA has published guidance it hopes will support firms complying with the new rules on crypto promotions. It is aimed both at registered crypto firms making promotions and at authorised forms who are communicating or approving promotions for crypto. FCA says other persons involved in promotions of crypto, such as platforms, social media influencers and unregistered crypto firms, should also read it.
The guidance summarises how the financial promotion restriction applies and what is a “qualifying cryptoasset”, and notes that beyond the promotion restriction, firms need to consider whether any activities they are carrying on are regulated activities. It explains the COBS rules that apply to promotions, and reminds firms that it generally expects that each stage of a promotion should be stand-alone compliant. It acknowledges the high levels of information that promotions of complex products might require, so is content for firms to provide these via prominent hyperlinks or separate pathways.
The guidance also reminds authorised firms that they must take into account the Consumer Duty when communicating or approving financial promotions. It notes that, while the Duty does not require firms to ensure that customers always receive good returns, nor to protect customers from risks they reasonably believe the customer understood or accepted, it would expect firms to consider whether the continued promotion of the asset was appropriate if all customers were losing money. Also, firms need to consider the overall product and service and the relevant target customers, to satisfy themselves that those customers are likely to understand the information on risks and complexity of the product promoted, and also consider whether the method of communication is appropriate. The guidance notes that promotion of complex products over social media may not be appropriate, and that social media should perhaps be used to signpost the reader to other channels which will contain more detailed information. It reminds readers of its infographic on social media promotions, and says it will soon issue broader guidance on social media promotions.
FCA also of course expects firms to conduct due diligence over any claims made, for example, to tie value to a fiat currency, or that cryptoassets are backed by a commodity, and must make appropriate disclosures.