October 2023 has been a very busy month for the FCA in terms of crypto asset regulation. In case you missed them, these were some of the most important FCA publications:
- Finalised guidance for crypto firms to help them comply with marketing rules has been published
- The FCA has identified 3 common issues with crypto promotions since the new rules went live.
- Feedback on good and poor practice has been outlined and examples provided
- Letter to Cryptoasset firms financial promotions regime
Evidently, the FCA has been making efforts to support firms to clearly understand their obligations so that they can comply with the regime. However, as seen below, it is easier said than done.
What are the FCA’s expectations?
In a previously published article, we highlighted that in just 24 hours after the rules went live, 146 alerts were issued. In total, since the change in legislation that brought cryptoasset promotions under the FCA remit, the FCA has issued over 200 alerts about potentially non-compliant firms.
Cryptoassets and cryptoasset regulation have been at the forefront of the FCA’s agenda, as shown in the FCA’s 2023-2024 business plan, where they explained that they were making the necessary arrangements in preparation for the 8th October when cryptoasset promotions would be brought within the FCA’s regulatory scope.
In short, the FCA expects authorised firms that approve crypto promotions to take their obligations seriously. Non-compliance will result in enforcement action, with the FCA already placing restrictions on one authorised firm. As mentioned in another article, this shows that the FCA isn’t just making rules but is also rigorously ensuring they are adhered to.
Reminders for cryptoasset firms and consumers:
There is a lot to unpack when it comes to crypto assets firms, their activities, when they fall under the cryptoasset financial promotions regime and how to comply with it. The FCA’s letter mentioned above shows the FCA’s risk appetite towards crypto assets and their alerts and warnings show how they intend to provide oversight. As a reminder:
- There are 4 routes cryptoasset firms can take to lawfully communicate cryptoasset promotions*:
- An authorised individual communicates the promotion.
- The promotion is initiated by an unauthorised party but receives approval from an authorised party. The Financial Services and Markets Bill, currently advancing through the UK Parliament, will establish a regulatory gateway for authorised firms to sanction financial promotions by unauthorised entities.
- The promotion is communicated by (or on behalf of) a cryptoasset business registered with the FCA under the MLRs, relying on the exemption specified in Article 73ZA of the FPO.
- The promotion is otherwise communicated in accordance with the stipulations of an exemption within the FPO.
- Consumers should check the FCA’s warning list before investing in any cryptoassets promoted to UK consumers.
*Find out how to apply to approve financial promotions for unauthorised firms.
Whilst the FCA has proactively highlighted the risks associated with crypto assets, the burden of prepare applications still rests with the applicants.
How Can Complyport Help?
Our expertise in regulatory compliance and our commitment to promoting healthier firm cultures align with the FCA’s objectives. As experienced and leading Compliance Consultants, we provide tailored support to cryptoasset firms seeking clarity and full compliance with these new FCA regulations.
Get In Touch Now
Don’t navigate the complex world of FCA regulations alone. Contact our team of Compliance Consultants for personalised support for your needs. Book a consultation call today to ensure a compliant and secure future in the crypto space.
Don’t miss this opportunity to stay ahead in the dynamic world of crypto regulation. Contact us today at thomas.salmon@complyport.co.uk.
About Complyport
Complyport is a market-leading consulting firm supporting the UK financial services industry for over 22 years. We specialise in providing Governance, Risk and Compliance services to support the regulated financial services industry to raise standards and thrive.
Complyport can assist with the preparation of a GAP analysis and impact assessment on the investment firm’s capital adequacy and risk management framework of the Company under the regulatory framework.
We specialise in supporting the UK financial services industry with compliance guidance, advice and best practice.
- Prudential support, IFPR, ICARA and financial resilience advice
- Financial Crime support and Forensics
- Consumer Duty implementation advice
- Operational resilience & Cybersecurity advice
- Financial Promotions guidance, support, and management software solutions
- CASS advice and protections of client assets
- Comprehensive compliance work-flow management software
- Compliance managed services and resourcing compliance personnel
- Skilled Person Reviews and Regulatory Investigation
Contact Thomas Salmon in our Regulatory Solutions team via email at: thomas.salmon@complyport.co.uk to book a free consultation.
