FCA sets expectations ahead of incoming crypto marketing rules

The Financial Conduct Authority (FCA) has published another press statement in relation to the upcoming new Financial Promotion regime for cryptoassets on October 8, 2023 (EventID 21585). To recall, under the new regime, cryptoasset firms marketing their products to UK consumers must adhere to several key provisions. Firstly, their marketing materials must be „clear, fair, and not misleading“. This means that information presented to potential investors must be accurate and unbiased, ensuring that consumers can make informed decisions about crypto investments. Additionally, prominent risk warnings must be included in all marketing content to underscore the inherent risks associated with cryptoassets. Furthermore, the FCA is banning incentives such as ‚refer a friend‘ bonuses, which often encouraged individuals to invest without fully understanding the risks involved. This prohibition aims to prevent firms from inappropriately incentivizing people to invest in cryptoassets.
In its statement now, the regulator acknowledges the technical and operational challenges faced by many firms in implementing the necessary changes for the new regime. As a consequence, the FCA is offering firms the opportunity to apply for extended deadline dates as far as the personalised risk warnings, the 24-hour cooling off period, client categorisation, and the appropriateness assessments are concerned. This means that firms may have until January 8, 2024 to introduce those features, while still needing to comply with the core rules by October 8, 2023. The extension will be granted by the FCA via a direction pursuant to section 138A under the Financial Services and Markets Act 2000 through a corresponding modification of related rules for just such firms.
In an accompanying open letter, the FCA notes that firms shall apply as soon as possible and send an e-mail to centralwaiversteam@fca.org.uk, including
– the firm’s name and firm reference number; and
– confirmation that the firm intends to consent to the modification proposed by the FCA.
In this context, the FCA also refers to its press statement outlining the findings from a recent review of the level of preparedness of affected firms (please see EventID 22917 in this context), which also outlines good practices and the FCA’s expectations. Finally, to conclude, the Authority warns that failure to comply with the new regime after the October deadline could result in criminal charges, including unlimited fines and imprisonment for up to two years. It is therefore crucial for affected firms to review their preparations and apply, if so needed, for an extension of the deadline.