Cryptoasset firms marketing to UK consumers must get ready for financial promotions regime

The Financial Conduct Authority, FCA, has published a press statement to remind cryptoasset firms, including cryptoasset issuers, platforms, or advisers operating in UK or marketing their products and services to UK investors, to prepare for compliance with the new financial promotions regime and to adhere to current regulatory requirements in this context.
##### Background
In January 2022, the HM Treasury issued a final Policy Statement to regulate financial promotions of in-scope cryptoassets via a corresponding regulation. Specifically, the statement set out that the promotions of in-scope cryptoassets offered by firms and individuals not themselves registered in UK will need to be approved by an authorized person under the Financial Services and Markets Act 2000. In order to not basically ban financial promotions for in-scope cryptoassets due to the fact that too few or no authorized persons are willing or able to approve such promotions, the Treasury temporarily exempts / exempted cryptoassets from this restriction so long as their providers are registered under Section 54 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, the so-called MLRs.
On February 1, 2023, this same policy statement was updated by the HM Treasury to state that once the final regulation is passed by the UK Parliament, it will come into force four months thereafter – instead of the six months thereafter as planned.
##### Possible financial promotion paths for cryptoasset firms
The FCA now outlines possible paths of cryptoasset firms for their financial promotions to be in-line with regulatory requirements following the HM Treasury’s policy update. Specifically, the FCA notes the following four alternatives – as mainly quoted:
– The promotion is communicated by an FCA authorised person (if the cryptoasset firm itself is authorized).
– The promotion is made by an unauthorised person but approved by an FCA authorised person.
– The promotion is communicated by a cryptoasset business registered under the MLRs with the FCA.
– The promotion otherwise complies with the conditions of an exemption in the Financial Promotion Order.
The FCA concludes by stating that it will closely monitor that the financial promotions of cryptoasset firms are either approved by authorized firms, communicated by authorized firms, or are legally exempt from promotion rules as noted above. Additionally, the FCA reminds cryptoasset firms of the fact that regardless of the financial promotion rules noted above, cryptoasset firms must still comply with the FCA’s Policy Statement (PS22/10) concerning the classification of „high-risk products“ including cryptoassets, the access to and promotion of such products, and the qualifications of firms offering high-risk investments and the standards they must adhere to. Most of these provisions came into force on February 1, 2023. Please see EventID 16812 in this context for more information.