On Monday, the new rules for marketing specific cryptoassets go into effect. These new rules mean that you cannot promote cryptoassets in the UK unless you meet the regulatory requirements. This means you must:
- Already be FCA authorised so you can approve your own promotions;
- Already be registered as a Cryptoasset firm under the Money Laundering Regulations with the FCA;
- Have arrangements in place for an FCA authorised firm to approve your promotions for you; or
- Have assurance that your advertising falls within one of the financial promotion exemptions.
If you are unable to choose one of the aforementioned possibilities, you must take steps by Monday to guarantee that all promotional activity in the UK has ceased, failing which you will be breaking regulation. Firms in this situation will be significantly impacted by this and will need to think carefully about their business strategies and whether their routes to market are compliant. Since all of the aforementioned methods require time to implement, it is frankly too late to take action to comply before the deadline. As a result, businesses will need to make some really painful decisions, such as ceasing some activities.
What should businesses do right away?
If your situation prevents you from promoting in the UK as of Monday, you must make sure that all of your financial promotions—including all media and advertising—are taken down before that time. Make sure you comprehend the precise meaning of a financial promotion and determine which of your advertisements could fit that description. Regarding what counts as a financial promotion, there is a ton of advice accessible, so you should make sure you have a thorough knowledge of this. You should be prepared to interact with the regulator and provide an explanation if you decide not to remove anything because you do not believe it to be a financial promotion. You can anticipate a very tough stance from the FCA in this matter.
Consider other middlemen that could advertise your services as well as your own website and social media platforms, and make sure they take any promotional content down.
If your company is based outside of the UK, you need to make sure that you have safeguards in place to stop UK residents from viewing and reacting to your promotions.
What happens if a company doesn’t comply?
You are probably in breach of Section 21 of the Financial Services and Markets Act (FSMA) 2000, which is the first and most crucial thing. This is a criminal offense that carries a maximum sentence of two years in jail, a fine of any amount, or both. It’s also important to keep in mind that any contracts you make as a consequence of an illegal offer could not be enforced against UK consumers as a result of Section 30 of FSMA.
The FCA can impose a variety of various punishments, which is the second point. This may entail blocking your marketing on websites, social media platforms, and apps as well as placing your company on a public warning list. Additionally, they have the right to pursue enforcement action against you and eventually file charges against you. Any of these dealings with the FCA will demand a major investment of your time, resources, and money.
How will the FCA finding my advertising?
You can be sure that the FCA’s Financial Promotions team will be organized and prepared to go on Monday morning. They may search advertising content using a variety of resources and methods, and cryptocurrency asset marketing will be given a lot of attention and resources. The regulator has been quite explicit about what they anticipate and the penalties of any breaches, so it’s probable that they will want to exercise their power as soon as possible and make an example of some non-compliant firms.
How can we help?
Select one of the four routes to market listed above, if you find yourself in a situation where you need to suspend your advertising right away. We can assist you if you choose to move forward with the Money Laundering Regulations’. Click here to learn more.
We currently provide customers in a variety of industries advice on how to make sure their financial promotions adhere to the FCA Financial Promotions Regime. When it comes to cryptoasset compliance, we have the regulatory knowledge; whether it’s your AML requirements or financial advertising, our experience and methodology set us apart. To find out how and why, get in contact.
Need some promotional advice? If you want to understand more about how to make sure your marketing materials meet FCA standards, please click here.
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