Dear Sir/Madam | Release Date: 4th July 2023
To read a longer summary of this Dear Sir/Madam letter, click here.
To access the original FCA document, click here.
Short Summary
The UK Government has now incorporated qualifying cryptoassets within the financial promotion regime effective from 8 October 2023. This regime mandates that all firms, including those based overseas, adhere to specific rules when marketing cryptoassets to UK consumers. The financial promotions, which encompass a variety of communications such as websites, apps, and social media, must not mislead and should provide clear risk warnings and a 24-hour cooling-off period for new investors.
Four legal pathways have been established for legally communicating cryptoasset promotions in the UK:
- Promotions by an authorised person.
- Promotions by an unauthorised person but approved by an authorised person.
- Promotions by a cryptoasset business registered under the MLRs.
- Promotions that comply with exemptions in the Financial Promotion Order.
Non-compliance with these routes could result in criminal charges. The Financial Conduct Authority (FCA) stresses the importance of preparations for this regime and advises cryptoasset firms to choose their compliance route carefully. Additionally, firms must transparently communicate any service changes to UK consumers and prepare orderly wind-down plans if ceasing UK operations.
Key Takeaways and Actions:
Cryptoasset firms must ensure compliance with the new financial promotions regime by the deadline, selecting an appropriate legal route and preparing accordingly. The FCA encourages early application for MLR registration and warns of strict actions against non-compliant promotions. Firms should also participate in the FCA’s upcoming roundtables and respond to their survey to clarify their preparation steps.