In January 2022, the UK Government released a consultation response, stating its intention to legislate the promotions of certain cryptoassets within the FCA's remit. On 1st February 2023, the Government released a policy statement regarding the regulation of financial promotions for cryptoassets, outlining how the regime will be strengthened and thus expanding it to cover cryptoasset firms globally. This was followed up with an FCA statement which you can view here.

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The key changes to note are:

• The new regime will be cross-border, meaning foreign firms promoting cryptoassets to UK consumers will be subject to it regardless of their location or the technology used to make the promotion.

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• The policy statement outlines the introduction of a bespoke exemption in the Financial Promotion Order for cryptoasset businesses registered with the FCA under the MLRs. This exemption will enable these businesses to communicate their own cryptoasset financial promotions to UK consumers.

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• The implementation period for the regime will be reduced from 6 months to 4 months from the relevant legislation being made in Parliament.

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• When the regime comes into force, there will be four routes for communicating cryptoasset promotions to UK consumers:

  • The promotion is communicated by an FCA authorised person.

    • This could mean a regulated financial adviser communicating a cryptoasset promotion to their clients.​

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• The promotion is made by an unauthorised person but approved by an FCA authorised person.

  • A so called s.21 sign-off. This means, that an authorised firm (with relevant competence and expertise) has signed off on the unauthorised firm's financial promotions.​

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• The promotion is communicated by a cryptoasset business registered under the MLRs with the FCA.

  • Financial Promotions that is generated and issued by a firm registered under the FCA's MLR regime.​

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• The promotion otherwise complies with the conditions of an exemption in the Financial Promotion Order.

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It's important to note that promotions that do not comply with these routes will be considered a criminal offence, punishable by up to 2 years imprisonment under section 21 of the Financial Services and Markets Act 2000 (FSMA). Therefore, cryptoasset businesses marketing to UK consumers, including firms based overseas, must prepare for this regime and take all necessary advice to ensure they can continue to legally promote to UK consumers.

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The FCA will also have supervision and enforcement powers over MLR registered cryptoasset businesses relying on the new bespoke exemption, and will take robust action where firms promote cryptoassets to UK consumers in breach of the requirements of the financial promotions regime. This may include issuing public warnings, taking down websites in breach, and enforcing action.