Tough new rules designed to make the marketing of cryptoasset products clearer and more accurate, and that ban incentives like ‘refer a friend’ bonuses, will come into force on 8 October.
The FCA has signalled that in response to industry readiness it will consider giving cryptoasset firms more time to implement certain changes, for instance a 24-hour cooling off period. Firms could be given until 8 January 2024 to introduce features that require greater technical development, with the core rules still coming into effect from 8 October 2023.
Firms must first apply for the flexibility which would then allow them time to make the required back-office changes successfully. The rules and the approach to implementation are aligned with the approach taken last year when the FCA introduced rules for marketing other high-risk investments.
From 8 October, UK consumers will have much greater protection as cryptoasset firms’ marketing must be ‘clear, fair and not misleading’, labelled with prominent risk warnings and must not inappropriately incentivise people to invest. These rules apply to firms wherever they are based globally and help strengthen how people are protected from the high risks associated with cryptoassets.
Lucy Castledine, Director of Consumer Investments at the FCA, said:
“From this October, crypto firms must market to UK consumers clearly, fairly and honestly. And they must provide risk warnings people understand. As a proportionate regulator, we’re giving firms that apply a little more time to get the other reforms requiring technology and business change right. We’ll maintain our close eye on firms during this extended implementation period.
“We are concerned by the failure of many overseas and unregulated crypto firms to engage with us on the new rules. Come 8 October, we will be taking action against firms illegally marketing to UK consumers.”
Anyone who continues promoting cryptoassets to UK customers past the October deadline without complying with the rules, may be committing a criminal offence punishable by an unlimited fine and/or up to 2 years imprisonment.
To further support firms make necessary improvements to their marketing, the FCA has published examples of good and poor practice on firms’ preparations for the new marketing rules.
The FCA continues to remind people that purchasing cryptoassets remains high-risk and that they should be prepared to lose all their money.