Crypto Promotions under the Microscope with new Legislation.

The UK government has published new legislation that will extend the scope of financial promotion restrictions to include financial promotions for certain cryptoassets, following increased scrutiny by UK authorities and regulators of the risks associated with cryptoassets.

On 27 March 2023, HM Treasury announced the draft version of the Financial Services and Markets Act 2000 (Financial Promotion) (Amendment) Order 2023. It is intended to improve customers’ understanding of the risks associated with cryptoassets investments, allowing them to make informed decisions, and will ensure that they are held to the same high standards as broader financial services.

Most cryptoasset promotions will now fall under the umbrella of the Financial Conduct Authority, and once in force, the Order will provide four routes to legally communicating a financial promotion for qualifying cryptoassets (a new controlled investment):

• the promotion is communicated by an authorised person;
• the content of the promotion is approved by an authorised person under Section 21;
• the promotion is communicated by, or on behalf of, a registered person;
• the promotion otherwise complies with the conditions of an exemption.

It is no surprise that the Order has been published following the spate of controversial advertisements and the downfall of FTX in recent months. Moving forward brands will need to be aware that UK authorities have the power to restrict cryptoasset promotions. Brands will  also have to include certain information in permitted promotions to ensure consumers can make informed decisions.

The ASA will likely continue to keep a close eye on crytpoasset promotions during the four month implementation period of the Order, in order to protect consumers from misleading claims in advertising and marketing for cryptoassets.