We recently reviewed several crypto firms’ compliance with certain financial promotion rules designed to help people better understand the risks of investing in crypto.
The regime[1], introduced in October 2023, followed detailed consultation and a change in legislation.
This review[2] looked at how firms are implementing personalised risk warnings, the 24-hour cooling off period, client categorisation and appropriateness assessments.
What our review found
We recognise this is the first set of rules for all crypto firms marketing to UK consumers and adjusting to new regulation can be challenging.
Firms have requested additional clarity on our expectations for these rules. We want to work collaboratively with the sector to raise standards and this publication will help firms meet their obligations and support consumers in making informed decisions.
We found some examples of firms demonstrating good practice which we have shared in our good and poor practice[2] to help firms get their compliance with the rules right.
However, we also found multiple instances where firms did not meet the required standards.
Where we identified concerns, we have worked extensively with individual firms to make significant improvements in line with our objectives[3]. But more work needs to be done to improve compliance.
We urge all firms to read our good and poor practice, as well our previously published guidance GC23/1 (PDF)[4].
We have seen firms relying on industry comparisons to benchmark what is acceptable. Given the levels of poor practice in the market, firms should not be doing this. Instead, we expect firms to engage with us directly to drive up standards across the sector.
All firms communicating or approving financial promotions must make sure they have strong systems and controls for compliance in place.
If firms do not improve, we will act. We will also consider firms’ compliance with regulatory requirements, including the financial promotions regime, as part of any application to be authorised under the future financial services regulatory regime for cryptoassets.
We will continue to work with industry on this and other parts of the current and upcoming crypto regime.
More information on support for firms
- We have previously provided firms with good and poor practice[5] that covers the full cryptoassets financial promotions regime, as well as feedback on common compliance concerns[6].
- Firm must register with us if they want to provide services that fall under the scope of the money laundering regulations (MLRs). These services include providing a cryptoasset exchange, Peer to Peer providers, issuing new cryptoassets, e.g. Initial Coin Offering (ICO) or Initial Exchange Offerings and custodian Wallet Providers. See our table of services that fall within the scope of the MLRs[7].
- We provide significant support for prospective applicants.
- We register firms who meet our standards for anti-money laundering and terrorist financing controls. We have published information on those regulatory standards[8].
- If firms have questions about registering for anti-money laundering purposes, they can request a pre-application meeting. These meetings provide further insights into requirements and the expectations of the FCA when the application is made.
- There is information on the application process and common registration questions on our crypto web hub for firms[9]. This is updated regularly to provide feedback on good and poor quality applications.