FCA sets expectations ahead of incoming crypto marketing rules

Tough new rules designed to make the marketing of cryptoasset products clearer and more accurate, and that ban incentives like ‘refer a friend’ bonuses, will come into force on 8 October.

The FCA has signalled that in response to industry readiness it will consider giving cryptoasset firms more time to implement certain changes, for instance a 24-hour cooling off period. Firms could be given until 8 January 2024 to introduce features that require greater technical development, with the core rules still coming into effect from 8 October 2023.  

Firms must first apply for the flexibility which would then allow them time to make the required back-office changes successfully. The rules and the approach to implementation are aligned with the approach taken last year when the FCA introduced rules for marketing other high-risk investments. 

From 8 October, UK consumers will have much greater protection as cryptoasset firms’ marketing must be ‘clear, fair and not misleading’, labelled with prominent risk warnings and must not inappropriately incentivise people to invest. These rules apply to firms wherever they are based globally and help strengthen how people are protected from the high risks associated with cryptoassets.  

Lucy Castledine, Director of Consumer Investments, said: 'From this October, crypto firms must market to UK consumers clearly, fairly and honestly. And they must provide risk warnings people understand. As a proportionate regulator, we’re giving firms that apply a little more time to get the other reforms requiring technology and business change right. We'll maintain our close eye on firms during this extended implementation period.  

'We are concerned by the failure of many overseas and unregulated crypto firms to engage with us on the new rules. Come 8 October, we will be taking action against firms illegally marketing to UK consumers.'

Anyone who continues promoting cryptoassets to UK customers past the October deadline without complying with the rules, may be committing a criminal offence punishable by an unlimited fine and/or up to 2 years imprisonment. 

To further support firms make necessary improvements to their marketing, the FCA has published examples of good and poor practice on firms’ preparations for the new marketing rules. 

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

Notes to editors

  1. Cryptoasset firms registered or authorised by the FCA can apply for flexibility under a modification by consent. If their application is successful, they will have until 8 January 2024 to implement the 24-hour cooling period, client appropriateness testing and client categorisation features. All other measures of the financial promotions regime will come into effect from 8 October 2023. 
  2. Firms’ preparations to comply with the cryptoasset financial promotions regime – feedback on good and poor practice
  3. From 8 October 2023 the Government legislated that there will be four routes cryptoasset firms can take when lawfully communicating 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. 
  4. PS23/6:Financial promotions rules for cryptoassets 
  5. The financial promotion rules, and the extension for certain technical developments, are aligned with our approach to implementing similar rules for other high-risk investments in 2022. We previously extended the deadline for implementing some measures, like the appropriateness testing, to ensure the features would be successful in helping protect consumers.  
  6. PS22/10: Strengthening our financial promotion rules for high-risk investments and firms approving financial promotions 
  7. The FCA will shortly publish final guidance for firms to provide further clarification on the expectations of firms communicating clear, fair and not misleading cryptoasset financial promotions. 
  8. The rules on promoting cryptoassets follow extensive work with the Government on their consultation on the future financial services regulatory regime for cryptoassets and collaboration with international counterparts and the wider industry. 
  9. The deadline for the new financial promotions rules follows shortly after the deadline for UK cryptoasset firms to comply with the Travel Rule (1 September 2023).  
  10. The Travel Rule was introduced following Government legislation, with the UK being one of the first groups of countries to adopt the rule. The Travel Rule helps to bring greater transparency to cryptoasset transactions, improve sanctions screening and tackle the misuse of cryptoassets. We recently set out our expectations for UK cryptoasset firms complying with the Travel Rule.  
  11. The new financial promotion for cryptoasset rules support the FCA’s three 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.    
  12. In 2022, the FCA required firms to amend or remove 8,582 promotions - 14 times more than 2021
  13. Find out more information about the FCA.