FCA Issues Guidance For Crypto Marketing

The rules came into full effect from 8 October 2023 and, on the day, the regulator issued 146 alerts regarding firms that were not registered or authorised to promote cryptoassets.

FCA sends 146 alerts in first day of crypto promotion regime

The new guidance sets out how authorised firms communicating or approving crypto financial promotions should apply Consumer Duty principles to their marketing, the FCA explained.

The guidance expands on what is expected of companies under the rules and refers to Consumer Duty in its practicality.

It stated that promotions should be clear and comprehensible, placing the onus on firms to make sure clients understand the risks of investing in cryptoassets, which the FCA reiterated are still regarded as high-risk investments.

As a result, firms should provide a "balanced view" of the potential risks and rewards investors could incur when investing in cryptoassets, and avoid making exaggerated claims on the potential returns of crypto investments as it would not provide a "true representation of what a consumer can reasonably expect to make".

Omitting relevant information will also be regarded as non-compliance, as this could lead to consumers not being able to make informed decisions. Similarly, the information provided in the promotions should be accurate, up-to-date and substantiated - this will apply to facts, figures and statements.

Treasury finalises plans to regulate crypto industry

When referring to past performance, the FCA said promotions "must include an adequate risk warning that past performance is not a reliable indicator of future results", whereas if alluding to future performance, firms must make it clear these assumptions are supported by the most up-to-date data.

Effective controls and systems should also be in place to monitor promotion compliance, while costs, fees and charges should be clearly outlined in the promotions as well.

Lucy Castledine, director of consumer investments at the FCA, said: "While the new rules for firms marketing crypto to UK consumers are aligned with the existing rules for other high-risk investments, we have engaged extensively with industry and designed this guidance to specifically support crypto firms complying.

"We continuously seek industry's input to get rules, their implementation, and the support we offer right. This guidance is no exception and we are grateful for all the input we received during the consultation period."

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