On 21 September 2023, the Financial Conduct Authority (FCA) published a letter (Letter) setting out a “final warning” to cryptoasset firms marketing to UK consumers, and those supporting them, to get ready for the cryptoasset financial promotions rules coming into force on 8 October 2023. For the purpose of this article, “consumer” means a retail client who is acting for purposes that are outside their trade, business or profession.
From such date, unauthorised and unregistered cryptoasset firms will only be able to communicate financial promotions that have been approved by an FCA or PRA authorised person or that are within the scope of certain narrow exemptions in the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (SI 2005/1529). The FCA will take “robust action” where it finds firms communicating cryptoasset financial promotions in breach of the rules.
The Letter highlights the FCA’s concerns relating to the poor engagement from many unregistered, overseas cryptoasset firms that have UK consumers. The FCA states that many of these firms have refused to engage with the FCA despite its best efforts.
If unregistered cryptoasset firms continue to promote cryptoassets to UK consumers on or after 8 October 2023, without having an authorised person approve the promotion, they will likely be in breach of section 21 of the Financial Services and Markets Act 2000. This would be a criminal offence punishable by up to two years imprisonment, an unlimited fine, or both.
In-scope firms should carefully consider the above and how the financial promotions rules will impact their business. The FCA has emphasised that it will likely issue an alert against firms illegally promoting to UK consumers on its website and will seek to remove or block illegal financial promotions.
On 7 September 2023, the FCA made available a modification for FCA registered and authorised firms to give them more time to comply with financial promotion rules that require greater technical development. Furthermore, the FCA also published a new webpage on good and poor practices for firms preparing for the new cryptoasset financial promotions rules. For more information on each, please see our recent article (available here).
The Letter is available here.