Final warning for cryptoasset firms marketing to UK consumers and those supporting them to get ready for the financial promotion regime

The Financial Conduct Authority (FCA) has published an open Dear CEO letter – or what it calls a final warning – addressed at cryptoasset firms marketing to UK consumers and those supporting such firms in view of the upcoming new financial promotion regime. Specifically, the new Financial Services and Markets Act 2000 (Financial Promotion) (Amendment) Order 2023 (EventID 21544), which will soon come into force, brings certain cryptoassets within the scope of the financial promotion regime. All firms marketing cryptoassets to UK consumers, including overseas firms, must comply with this regime beginning in October 2023.
The purpose of this regime is to reduce and prevent harm to consumers from investing in cryptoassets that do not match their risk appetite. It aims to create a fairer and more consumer-focused landscape in which firms can compete and innovate, with consumers having access to fair and accurate information to make informed investment decisions. The upcoming rules applicable to cryptoasset promotions are thereby consistent with those that apply to the promotion of other high-risk investments.
The FCA has been engaging with firms to make them aware of the approaching deadline and support them in preparing for the new regime. However, there has been poor engagement from many unregistered, overseas cryptoasset firms, which raises concerns about their preparedness to comply with the upcoming new requirements. Such include that unregistered and unauthorized crypto businesses will only be able to communicate financial promotions that have been approved by an authorized person or are within the scope of certain exemptions outlined in the above noted Financial Promotion Order. Therefore, the FCA emphasizes that it will take robust action against firms illegally promoting to UK consumers, including placing them on the Warning List and removing or blocking any illegal financial promotions on websites, social media accounts, and apps.
Intermediaries that support unregistered cryptoasset firms, such as social media platforms, search engines, app stores, domain name registrars, and payments firms, are expected to play their part in protecting UK consumers from illegal promotions. They should carefully consider their obligations under the Proceeds of Crime Act 2002 (POCA) and the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 to ensure they are not engaged in, supporting, or facilitating money laundering.
Furthermore, the FCA notes that the Online Safety Bill, which is currently making its way through parliament, will require search engines and social media companies to mitigate the risks posed by the presence and dissemination of illegal content on their sites, including illegal financial promotions. This new regime will be overseen by the Office of Communications (OfCom) and the FCA has worked closely with OfCom to create a shared understanding of how platforms‘ obligations under the bill will interact with the financial promotions regime.