Crypto Promo - Slow Mo

The FCA has today published a policy statement and near final rules regarding the promotion of cryptoassets. Absent any unforeseen events, these will come into force on 8 October 2023.

The rules take much the same shape as those consulted on by the FCA in their consultation on the promotion of high risk investments (including cryptoassets) and the associated final rules on the promotion of high risk investments (excluding cryptoassets) contained in PS 22/10.

So the content might not be a surprise per se, but it's still likely to come as a bit of disappointment for many in the industry. While, unlike at the time of the initial consultation, the legislation now permits firms registered with the FCA for money laundering purposes to make cryptoasset financial promotions without breaking the law, they will need to jump through a number of regulatory hoops in order to be able to do so.

Most notably, perhaps:

• cryptoasset firms will have to assess the appropriateness of a cryptoasset for any customer, which in many cases will involve the customer being required to answer a questionnaire devised by the firm to determine the customer's understanding of the area, before they can first provide access to cryptoassets; and 
• there will have to be a 24 hour period between the customer making first contact with the firm and being able to invest.

Firms have pointed out that this is likely to make the whole process stickier. One might consider that this is what the FCA was after all along. There is a valid question as to whether this might just drive customers offshore, but interestingly the proposed cryptoasset regulatory regime may in the future close off that loop too.