On 8 October 2023, new rules came into force relating to the financial promotion of cryptoassets following legislation to bring promotions of certain cryptoassets within the scope of the UK financial promotions regime (“Regime”). The rules are set out in a Policy Statement published by the Financial Conduct Authority (“FCA”) in June 2023, supported by updated guidance on how the rules might be applied in practice (“Guidance”) published in November 2023. The rules extended the Regime to cryptoassets to capture financial promotions capable of having an effect on UK consumers to address consumer harms and ensure consumers appreciate any investment risks. For further background, and a summary of the rules and Guidance, see Wiggin’s previous article.

On 14 February 2024, the FCA published a report providing insights on data resulting from enforcement action it has taken in 2023 in respect of financial promotions, including in relation to cryptoassets. The report states that the FCA remains concerned over the levels of compliance with the cryptoasset financial promotion rules.

With respect to cryptoasset financial promotions, the FCA conducted a review of a number of crypto firms, including 44 firms registered with the FCA for anti-money laundering purposes as well as unregistered firms whose promotions have been approved by an FCA authorised person, and found significant levels of non-compliance. Concerns relate to a variety of issues including the use of affiliates and “finfluencers” to promote the firm, using generic rather than product-specific risk summaries and hard-to-read or hard-to-find risk warnings, and using their regulated status in a promotional manner.

As for authorised persons who are permitted to approve financial promotions for unregistered cryptoasset firms, the report states that the FCA will continue to hold them to high standards to ensure they can identify non-compliance in light of their key role in allowing overseas firms to promote their products to UK consumers. The FCA has placed requirements on one firm to prevent it from approving cryptoasset financial promotions, while another has done so voluntarily.

Between 8 October and 31 December 2023, the FCA issued a total of 450 consumer alerts against firms illegally promoting cryptoassets to UK consumers. The FCA is working with tech companies to remove and block illegal promotions including within websites, mobile apps and social media accounts, resulting in 35 apps being removed from App Stores by the end of December 2023.

The FCA is also working with regulated firms who they consider are not meeting their obligations when providing support services, such as payment services, to cryptoasset firms that are illegally promoting to UK consumers, to remind them of their regulatory duties such as the requirement to carry out due diligence on their clients, KYC checks and ensuring they are not dealing with proceeds of crime. The FCA is expected to have a renewed focus on this area in 2024.