Firms wishing to promote cryptoassets in the UK must now be legally authorised or registered by the FCA, or have their marketing approved by an authorised firm. Promotions must be clear, fair and not misleading, labelled with prominent risk warnings and must not inappropriately incentivise people to invest. The regime also applies to businesses based overseas but marketing products to UK consumers.
The FCA says it has identified the following issues since the new cryptoassets promotions regime was put into force on October 8:
- promotions making claims about the ‘safety’, ‘security’ or ease of using cryptoasset services without highlighting the risk involved;
- risk warnings not being visible enough due to small fonts, hard-to-read colouring or non-prominent positioning;
- firms failing to provide customers with adequate information on the risks associated with specific products being promoted.
The regulator issued 145 alerts in the first 24 hours of the new regime and as of Wednesday that number had risen to 221.
Promotions can still be communicated if they are issued through an authorized person, by a firm registered under Money Laundering Regulations (MLR), or if the promotion otherwise complied with the conditions of an exemption in the Financial Promotion Order.
Binance, the world’s largest crypto firm, stopped onboarding new customers in the wake of the new regime. Binance stated that it was using an FCA-authorized firm, REBS, to review and approve the FCA rules, but that as a result of the new regime, REBS had to withdraw any existing approvals of financial promotions on behalf of any cryptoasset businesses.