UK Introduces Stricter Regulations on Cryptocurrency Promotions Targeting Consumers

The Financial Conduct Authority (FCA) has introduced new rules aimed at providing UK consumers with a better understanding of what they are investing in and the risks involved when it comes to cryptocurrency promotions. These changes follow a consultation period and are designed to align with existing rules for high-risk investments.

Background

According to Lucy Castledine, Director of Consumer Investments at the FCA, “While the new rules for firms marketing crypto to UK consumers are aligned with the existing rules for other high-risk investments, we’ve engaged extensively with industry and designed this Guidance to specifically support crypto firms complying.”

New Rules

The guidance provides details on how authorized firms communicating or approving financial promotions should apply the Consumer Duty to their marketing. The FCA has also published examples of good and poor practice on firms’ preparations for the new financial promotions rules.

Here are some key points about the new rules:

• Firms promoting cryptocurrencies to UK retail consumers must be authorized or registered by the FCA, or have their marketing approved by an authorized firm.
• These changes came into effect on October 8, 2023, and firms were warned since February to prepare for these changes.

Warning from the FCA

Despite these new regulations, the FCA warns that cryptocurrency investments remain high-risk and consumers should be prepared to lose all their money invested. The agency reminds investors to check the Warning List before making any investment in cryptocurrency assets.

Recent Enforcement Actions

In the first two weeks of the new rules, the FCA issued 221 alerts and warned about common issues with cryptocurrency marketing. The agency will shortly publish a Discussion Paper outlining its proposals for regulating stablecoins for use in payments in the UK and encourages stakeholders to engage with this paper.