In October 2023, the regulation of promotions for "qualifying cryptoassets" targeting UK customers was brought within the remit of the FCA's financial promotions regime. As a result, the rules for such promotions are now aligned with the existing rules for other high-risk investments, including that any relevant promotions must be fair, clear and not misleading.
These rules are primarily found in relevant parts of the FCA handbook, namely Principles 7 and 12, PRIN2A, GEN, COBS 4 and COBS 10. The manner in which these rules apply specifically to promotions of qualifying cryptoassets has been set out in Policy Statement PS23/6 which has been supplemented by detailed non-handbook guidance from the FCA published in November 2023. In addition to specific rules applying to the promotion of qualifying cryptoassets, authorised firms communicating or approving financial promotions for these assets should apply the FCA's consumer duty to such marketing activities as well.
While the promotion of qualifying cryptoassets is now subject to these detailed rules, cryptoassets as a product remain largely unregulated although that is set to change as we discuss here.
What is covered?
The promotions regulatory regime applies to all firms marketing qualifying cryptoassets to UK consumers regardless of whether based overseas or what technology is used to make the promotion.
Broadly, a ‘qualifying cryptoasset’ is any cryptographically secured digital representation of value or contractual rights that is transferable and fungible, but does not include cryptoassets which meet the definition of electronic money or an existing controlled investment. Qualifying cryptoassets are simply referred to as cryptoassets in the remainder of this article.
Notably, the definition above does not include non-fungible tokens (NFTs), or limited payment tokens that can only be redeemed with the issuer and used for the payments of specific goods and services, such as non-monetary customer loyalty points. The ASA will continue to regulate all ads for these types of cryptoassets.
As a result of the change in the rules, invitations or inducements to engage in the following activities in relation to cryptoassets are within scope of the FCA's financial promotions regime:
- dealing in securities and contractually based investments
- arranging deals in investments
- managing investments
- advising on investments
- agreeing to carry on specified kinds of activity which fall within the FCA's remit.
What rules apply?
Cryptoassets are categorised as restricted mass market investments (RMMIs), meaning that mass marketing to consumers is permitted, subject to certain restrictions. This reflects the FCA's position that consumers face particular risk in relation to these investments, including sudden, large and unexpected losses due to volatility, firm failure, comingling of funds, cyber attacks and financial crime.
There are now four ways to legally promote cryptoassets to UK consumers:
- communicated by an authorised person licensed under the UK Financial Services and Markets Act 2000 (FSMA)
- made by an unauthorised person but approved by an authorised person
- communicated by (or on behalf of) a cryptoasset business registered with the FCA under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs)
- otherwise communicated in compliance with the conditions of one of a limited set of exemptions, including specific exemptions for investment professionals, communications to journalists, and communications to overseas recipients.
Promotions made other than by using one of these routes will be in breach of s21 FSMA, which is a criminal offence, punishable by up to two years imprisonment, the imposition of a fine, or both.
The FCA's enforcement activities may also include requesting take downs of websites and imposing restrictions on firms to prevent harmful promotions. The FCA has also published and regularly updates its warning list of unauthorised firms, enabling recipients of promotions and consumers generally to identify firms operating without the permission of the FCA.
Requirements applying to the consumer journey for cryptoasset promotions
The FCA has also introduced specific rules relating to the consumer journey for cryptoasset promotions. Advertisers are required to provide standard risk warning wording to accompany promotions of cryptoassets, and the FCA has published detailed guidance on how such wording should be provided, depending on the context. The standard wording is as follows: "Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong. Take 2 mins to learn more".
There is also a ban on offering any monetary or non-monetary benefits that incentivise investment activity as part of promotions for cryptoassets, such as ‘refer a friend’ or new joiner bonuses, and a minimum 24-hour cooling-off period has been introduced for first-time investors with a firm. This restriction means that consumers cannot receive a Direct Offer Financial Promotion (DOFP) in relation to cryptoassets, unless the consumer has reconfirmed their request to proceed after waiting at least 24 hours, having been shown a personalised risk warning, which again is subject to guidance on how it is to be provided, depending on the context.
DOFPs for cryptoassets can only be made to consumers who are categorised as Restricted, High Net Worth and Certified Sophisticated investors, but not to self‑certified sophisticated investors, unlike with certain other financial promotions. Consumers receiving a DOFP must also be assessed for appropriateness before their application or order for an RMMI can be processed, and firms are subject to various record-keeping requirements in relation to such investments.
Continuing role of the ASA
While the ASA is no longer regulating technical claims in ads for most cryptoassets in non-broadcast media (this being within the remit of the FCA, as explained above), the ASA does still regulate the ‘non-technical’ aspects of such ads, including matters relating to offence, social responsibility, superiority claims, fear and distress, denigration and other claims that do not relate to specific characteristics of the product as a cryptoasset. In addition, the ASA continues to regulate all finance-related broadcast advertising in Ofcom-regulated TV and radio services under the BCAP Code, and may seek advice from the FCA where needed. Ads for cryptoassets are explicitly banned from being broadcast to mainstream, non-specialist audiences under rule 14.5.5 of the BCAP Code.
How it's working in practice
Within a few weeks of the expansion of the FCA's remit to over cryptoasset promotions, the FCA published a list of common issues with cryptoasset financial promotions it had identified. These included:
- claims about the ‘safety’, ‘security’ or ease of using cryptoasset services without highlighting the risk involved
- risk warnings not being sufficiently visible
- failures to provide customers with adequate information on the risks associated with specific products.
In response, the FCA reiterated its intention to take robust action to remove illegal content, while also taking a proportionate approach where firms are engaging in good faith with a view toward achieving compliance. However, the FCA's enforcement powers only extend to firms promoting, or approving promotions to UK consumers and it does not have powers to directly require online platforms to remove content that is in breach of the relevant legislation, instead relying on its ability to influence such platforms through negotiation.
In January 2025, the FT reported that the FCA was yet to penalise any firm that failed to take down illegal crypto adverts, despite half of all banned promotions remaining online after the watchdog asked for their removal. Only 54% of the 1,702 alerts issued between October 2023 and October 2024 ended in the ads, apps or websites being taken down. The FCA's active enforcement has so far focused primarily on 'finfluencers' – individuals with a large following online who are engaging in financial promotions in breach of s21 FSMA, and these investigations have resulted in a number of criminal convictions.
Recent guidance from the FCA has also identified a common business model involving MLR-registered firms offering services for exchanging fiat-to-crypto or crypto-to-fiat which are embedded on third-party (unregistered) firms’ websites or apps. Despite being MLR-registered, the FCA has warned that the firms offering the services may be at risk of supporting the illegal communication of their partner’s financial promotions. Likewise, the FCA has warned in the same guidance that authorised or registered payment services and e-money firms partnering with, or providing payment solutions to unregistered cryptoasset firms, may be at risk of directly or indirectly benefiting from such firms' illegal financial promotions.
While we can expect to see the FCA continuing to proactively communicate and enforce its new powers in relation to illegal cryptoasset promotions, including via the use of penalties which go significantly beyond those previously available to the ASA, it remains to be seen how effective this will be, particularly regarding those published via online platforms over which the FCA has limited control.
