UK Conduct Regulator Offers Small Reprieve for Cryptoasset Marketing

The U.K. Financial Conduct Authority announced on September 7, 2023, that firms may avail themselves of a delay to the application of some rules applying to cryptoasset financial promotions. The FCA published rules for cryptoasset financial promotions in June this year, which will apply from October 8, 2023 (the same date that the Financial Services and Markets Act 2000 (Financial Promotion) (Amendment) Order 2023 brings the promotion of cryptoassets within scope of the U.K. regulatory regime). The reprieve is available, on application, to:

• firms registered with the FCA under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 that intend to communicate cryptoasset financial promotions; and
• authorized firms that intend to communicate or approve cryptoasset financial promotions.

For firms granted the modification consent, the new rules on personalized risk warnings, 24-hour cooling off period, client categorization and appropriateness assessments will only apply from January 8, 2024. The rules on risk warnings, risk summaries, the ban on incentives to invest and the requirement that financial promotions must be fair, clear and not misleading will still apply from October 8, 2023.

The FCA has decided on this approach in light of findings from its review of firms' preparations for the incoming rules, which indicated that firms have prioritized compliance with the U.K.'s Travel Rule, applicable since September 1, 2023, and in recognition that global firms are having to adapt their business models to comply with the new financial promotion rules.

The FCA has also published expectations for firms to which the incoming cryptoasset advertising rules will apply, providing guidance on good and bad practices.

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