[UK] 146 FCA alerts raised in first 24 hours of new crypto marketing regime

In the UK, changes to legislation that bring cryptoasset promotions under the remit of the Financial Conduct Authority (FCA) are now in force, FCA reports.

It issued 146 alerts about cryptoasset promotions on the first day of the new regime.

The FCA reportedly expects businesses - including social media platforms, app stores, search engines, domain name registrars and payments firms - to consider the alerts it has issued and play their part in protecting UK consumers from illegal promotions.

The Authority advises consumers to check the Warning List before making any investment in crypto. The list is intended to help consumers understand where firms' promotions may be breaking the law and to consider the promotion with the full information available.

It says it takes a risk-based approach, so not all firms of potential concern will immediately be added. The list will, however, be continually updated as firms which may be illegally communicating cryptoasset promotions and are failing to engage with the FCA constructively are identified.

The FCA will reportedly continue to remind people that purchasing cryptoassets remains high-risk and that they should be prepared to lose all their money.

Further information

• Since 8 October 2023, firms wishing to promote cryptoassets in the UK must, by law, be authorised or registered by the FCA, or have their marketing approved by an authorised firm. Under FCA rules, promotions must also be clear, fair and not misleading, labelled with prominent risk warnings and must not inappropriately incentivise people to invest. These changes bring cryptoassets in line with other high-risk investments. 
• The financial promotion regime reportedly applies to all firms marketing cryptoassets to UK consumers, regardless of whether the firm is based overseas or what technology is used to make the promotion. The FCA’s rules are designed to help people understand what they are purchasing, and the risks involved.  
• The Government has legislated to bring promotions of certain cryptoassets within the financial promotions regime. Following this change, there are 4 routes cryptoasset firms can take to lawfully communicate cryptoasset promotions:
• 1. An authorised person communicates the promotion.
• 2. An authorised person approves the promotion.
• 3. A crypto firm registered under the Money Laundering Regulations (MLR) communicates the promotion.
• 4. The promotion otherwise complies with the conditions of an exemption in the Financial Promotion Order.   
• Where firms are engaging with the FCA in good faith with a view toward achieving compliance it is reportedly taking a proportionate approach to implementation. 
• The FCA has been warning firms since February to prepare for these changes. Recently it also published a letter warning crypto firms of the impending deadline to comply and to urgently consider their position and communication with customers if they believe they will not be able to meet the October deadline. 
• In addition to extensive engagement with the industry throughout this year, the FCA has also set out its expectations for firms complying with the new rules. 
• In the case of non-compliance, it will take robust action to remove illegal content to protect consumers. 
• The new financial promotion rules for cryptoasset promotions support the FCA’s 3 core commitments laid out in the 2023/24 Business Plan to reduce and prevent serious harm, set and test higher standards and promote competition and positive change.

Source: FCA

(Links via original reporting)

In the UK, changes to legislation that bring cryptoasset promotions under the remit of the Financial Conduct Authority (FCA) are now in force, FCA reports.

It issued 146 alerts about cryptoasset promotions on the first day of the new regime.

The FCA reportedly expects businesses - including social media platforms, app stores, search engines, domain name registrars and payments firms - to consider the alerts it has issued and play their part in protecting UK consumers from illegal promotions.

The Authority advises consumers to check the Warning List before making any investment in crypto. The list is intended to help consumers understand where firms' promotions may be breaking the law and to consider the promotion with the full information available.

It says it takes a risk-based approach, so not all firms of potential concern will immediately be added. The list will, however, be continually updated as firms which may be illegally communicating cryptoasset promotions and are failing to engage with the FCA constructively are identified.

The FCA will reportedly continue to remind people that purchasing cryptoassets remains high-risk and that they should be prepared to lose all their money.

Further information

• Since 8 October 2023, firms wishing to promote cryptoassets in the UK must, by law, be authorised or registered by the FCA, or have their marketing approved by an authorised firm. Under FCA rules, promotions must also be clear, fair and not misleading, labelled with prominent risk warnings and must not inappropriately incentivise people to invest. These changes bring cryptoassets in line with other high-risk investments. 
• The financial promotion regime reportedly applies to all firms marketing cryptoassets to UK consumers, regardless of whether the firm is based overseas or what technology is used to make the promotion. The FCA’s rules are designed to help people understand what they are purchasing, and the risks involved.  
• The Government has legislated to bring promotions of certain cryptoassets within the financial promotions regime. Following this change, there are 4 routes cryptoasset firms can take to lawfully communicate cryptoasset promotions:
• 1. An authorised person communicates the promotion.
• 2. An authorised person approves the promotion.
• 3. A crypto firm registered under the Money Laundering Regulations (MLR) communicates the promotion.
• 4. The promotion otherwise complies with the conditions of an exemption in the Financial Promotion Order.   
• Where firms are engaging with the FCA in good faith with a view toward achieving compliance it is reportedly taking a proportionate approach to implementation. 
• The FCA has been warning firms since February to prepare for these changes. Recently it also published a letter warning crypto firms of the impending deadline to comply and to urgently consider their position and communication with customers if they believe they will not be able to meet the October deadline. 
• In addition to extensive engagement with the industry throughout this year, the FCA has also set out its expectations for firms complying with the new rules. 
• In the case of non-compliance, it will take robust action to remove illegal content to protect consumers. 
• The new financial promotion rules for cryptoasset promotions support the FCA’s 3 core commitments laid out in the 2023/24 Business Plan to reduce and prevent serious harm, set and test higher standards and promote competition and positive change.

Source: FCA

(Links via original reporting)