New restrictions on the financial promotions of crypto assets

The Financial Conduct Authority (FCA) has launched a consultation paper (CP22/2) on financial promotion rules for high-risk investments, including crypto assets.

The FCA wants to ensure firms that approve and communicate financial marketing have relevant expertise and understanding of the investments being offered, improve risk warnings on ads and ban incentives to invest, for example, new joiner or refer-a-friend bonuses.

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Points to Note from the FCA

• it will require service providers in respect of qualifying crypto-assets to have their financial promotions to be approved by a regulated financial services firm (unless they are authorised themselves)
• communications will need to comply with certain FCA rules; for example, they must be fair, clear and not misleading
• rules will apply in various respects for high-risk investments such as crypto assets
• rules will apply to any in-scope promotion capable of having an effect in the UK, even where it is communicated by an overseas person
• in relation to qualifying crypto assets, the promotion of engagement in any “controlled activities” specified under the financial promotions regime will be caught. This includes dealing, arranging deals in, managing and advising on qualifying crypto assets

What it means for you

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• If you are only registered with the FCA for AML purposes or regulated under e-money or payment services regulation, you will not qualify as an approver;
• Remember that any controlled activities concerning “qualifying crypto assets” will be caught as controlled investments under the financial promotions regime;
• The definition of “qualifying crypto assets” has been applied broadly, to include any cryptographically secured digital representation of value or contractual rights which is fungible and transferable;
• Should you wish to respond, do so by 23 March 2022 as the FCA closes its consultation on this date., with plans to finalise its rules in the summer.

How can we help

Reach out to MEMA for more information on how we can support you in addressing your financial promotions program.