As we reported in February 2023, the government confirmed that it would extend the financial promotion regime to cryptoasset financial promotions and that the legislative changes would include a time-limited exemption for communications made by FCA registered cryptoasset businesses.
On 27 March 2023, a draft statutory instrument, the Financial Services and Markets Act 2000 (Financial Promotion) Amendment) Order 2023 (Order), was published along with a draft explanatory memorandum. The new regime, which will be supported by FCA rules, is intended to enhance consumers’ understanding of the risks associated with cryptoasset investments and ensure that cryptoasset promotions have to meet the same standards as for other financial services.
The Order makes the following amendments to the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (FPO):
The Schedule to the Order makes a number of targeted amendments to the Financial Services and Markets Act 2000 (FSMA) to give the FCA the ability to apply some of its existing supervisory and enforcement powers to registered persons and their financial promotions. The government has published a Keeling schedule that shows the changes to FSMA.
In light of the recent turbulence in cryptoasset markets and the risks to consumers, the implementation period for the Order has been shortened from 6 months to 4 months.
The government will not be providing further guidance on the Order. However the FCA intends to amend its perimeter guidance manual. It has separately confirmed that it will publish its final rules for cryptoasset financial promotions once the legislation has been made – its approach is expected to be consistent with how it regulates other high-risk investments.
If you have any questions about the regulatory regime for cryptoasset financial promotions, please let us know.