Cryptoasset firms and the FCA’s financial promotions regime

26 Sep 2023, 54 mins ago

How can cryptoasset firms prepare for the FCA’s financial promotions regime?

On 21 September 2023 the FCA issued a final warning letter to cryptoasset firms marketing to UK consumers and those supporting them.

The letter informed relevant firms to get ready for the implementation of the financial promotions regime.

This followed an earlier letter sent on 7 September 2023 in which the FCA advised firms to prepare to comply with the cryptoasset financial promotions regime.

What is happening?

The FCA’s financial promotions regime will bring certain cryptoasset firms within the scope of the financial promotions regime. This scheme requires all firms marketing to UK consumers to comply with the regime (wherever they are based).

Indeed, Thomas Cattee, Gherson Solicitor LLP’s (“Gherson’s”) head of Business Crime, Investigations and Regulatory Team, has provided comment to Law 360 about the policing of this regime.

What action can be taken against non-complaint firms?

The FCA reminds unregistered cryptoasset firms that, once the regime enters into force, if they continue to promote cryotoassets to UK consumers, this will likely be a breach of Section 21 of the Financial Service and Markets Act 2000, which would be a criminal offence punishable by up to two years imprisonment and an unlimited fine, or both.

What about businesses supporting unregistered cryptoasset firms?

The FCA also reminds all business-supporting unregistered cryptoasset firms that they should carefully consider their obligations under the Proceeds of Crime Act. 

This is on the basis that benefits obtained by unregistered cryptoasset business from illegal financial promotions would constitute criminal property.

What do relevant cryptoasset firms need to do?

Once the regime comes in to force, unregistered firms must cease making illegal financial promotions to UK consumers.

Unregistered cryptoasset firms can legally communicate financial promotions to UK consumers, if those promotions are approved by an authorised firm.

Firms that believe that they might be in breach after the regime comes into force will need to stop or block illegal promotions. 

To do otherwise could result in an FCA alert and further action against them.

Increased crypto regulation

As Gherson have been charting, the UK crypto regulatory landscape is becoming ever more complex.

Indeed, Gherson have recently written blogs on the following topics:

Crypto Anti-Money Laundering and Sanctions Compliance

UK crypto regulation – what changes can we expect to UK crypto regulation in 2023?

UK cryptoasset firms and sanctions reporting

How Gherson can assist

Gherson’s white-collar crime and regulatory team are able to provide advice and assistance with AML, regulatory and sanctions compliance, including in situations involving cryptoassets

Additionally, the team has recently started a series on the regulation of crypto, with the aim of advising those who work in the compliance of this sector.  In addition, for those who would like advice on relevant issues, including those who have had issues with the FCA registration process, our specialist regulatory and compliance team can guide individuals and companies through the process.

Please do not hesitate to contact us for further advice, send us an e-mail, or, alternatively, follow us on TwitterFacebookInstagram, or LinkedIn to stay-up-to-date.

The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please do not hesitate to contact Gherson. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.

©Gherson 2023