The United Kingdom Financial Conduct Authority (FCA) informed crypto firms about the incoming financial promotion rules for UK customers.
The FCA introduced these rules on June 8, considering that crypto ownership in the UK doubled from 2021 to 2022, with a survey that revealed that 10% out of 2000 participants held one form of crypto asset or the other.
FCA List Compliance Routes For Crypto Marketing Firms
The new financial promotion regime is expected to take effect from October 8, 2023, with the FCA conducting the necessary preparations, including the letter sent today to crypto firms.
In this letter, the UK financial watchdog states that the new rules apply to all firms, local or foreign advertising digital assets to UK citizens. The rules will be effective for foreign firms even if the UK forms just part of the target.
The Financial Conduct Authority listed the four routes through which crypto firms can legally communicate any financial promotion to UK customers.
According to the FCA, a financial promotion is any “invitation or inducement to engage in investment activity or to engage in claims management activity that is communicated in the course of business.”
Beginning on October 8, 2023, crypto asset promotions are to be communicated by an authorized person or by an unauthorized person but with the approval of an authorized person.
In this context, an authorized person refers to an individual with permission to execute a regulated activity by section 31 of the FCA handbook.
Cryptocurrency companies registered with the FCA can also publish financial promotions under the UK Money Laundering, Terrorist Financing, and Transfer of Funds Act 2017.
Finally, the new financial regime will also allow promotions that meet the criteria of exemption based on the Financial Services Market Act 2000 (Financial Promotion) Order 2005.
According To The FCA, conducting any financial promotion outside of these options will be considered a criminal offense for which the penalty includes up to 2 years imprisonment, an unlimited fine, or both.
FCA Admonishes Unregistered Crypto Firms To Prepare For New Regime
In its letter today, the Financial Conduct Authority also stated that unregistered crypto firms should start preparing before October 8, 2023.
The UK financial regulator has stated that these businesses should explore which of the four routes of promotions they intend to employ, ensuring that they can match all requirements of the chosen route.
Furthermore, suppose these unregistered crypto asset firms cannot select any of the legal routes of financial promotion. In that case, the FCA is mandating them to effectively communicate to their UK customers if there will be changes in the service and provide enough time for adjustments.
Finally, should these businesses conclude on shutting down their UK market ahead of the new financial regulations, they must lay down “orderly wind-down plans” aimed at reducing negative effects on their customers.
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