UK Cryptoasset Financial Promotion Regime

The new UK financial services promotion regime comes into force next month and makes unregulated promotions of cryptoassets illegal. It affects many businesses worldwide including VASPs, affiliates, advertisers and payment companies.

Peter Howitt

Managing Director


The FCA has sent a number of warning letters reminding relevant cryptoasset businesses of the new regime and the criminal offence, punishable by an unlimited fine and up to 2 years imprisonment. The UK regime applies to all relevant cryptoasset businesses worldwide in respect of UK customers or promotions capable of having an effect in the UK. It also impacts service providers such as advertisers, social media platforms and payments companies.

Summary of the cryptoasset financial promotion regime (tl;dr)

  • Law: The regime is implemented into the existing Financial Services and Markets Act 2000 by way of the (Financial Promotion) (Amendment Order) 2023 from 08 October 2023.
  • Scope:
    • It applies to a wide range of persons and communications.
    • It applies primarily to VASPs (including custodians, and persons exchanging crypto-crypto and crypto-fiat). It also applies to some intermediaries that enable investments by way of business (e.g. providing links to another website under a referral scheme).
    • Not all cryptoassets are in scope (e.g. NFTs are excluded).
    • Many related DeFi services are also in scope including complex yield cryptoasset models or arrangements e.g. borrowing, lending and staking. The FCA take the view that some of these are unlawful collective investment schemes which are covered by different financial services rules.
  • Marketing, websites &  apps:
    • Promotions include websites, blog posts, mobile phone apps, videos (e.g. YouTube promoters) and social media channels (X, LinkedIn etc).
    • The FCA expect that the vast majority, if not all, of websites and apps that enable a UK person to invest in cryptoassets will be in scope of the financial promotions regime.
  • Service Provider Risks:
    • Payment companies, social media companies and advertisers are also required to ensure that illegal financial promotions are not communicated to UK consumers by unregistered cryptoasset firms. This has led to some banks and payment companies shutting down UK crypto payments activities until they are clearer on how to comply. CoinDesk – Why Some Crypto Firms Are Suspending Services in the U.K.
  • Lawful Promotions: Sites that offer relevant controlled cryptoasset services to UK consumers will need to either stop doing so or use one of the 4 lawful routes explained below.
  • Permitted consumer investors: There are now only two categories of individual investors that such sites can offer cryptoasset services to (investment professionals and certified sophisticated investors). The rules relating to corporate clients are different and allow for certain promotions to qualifying corporates, associations and trusts.
  • Funds: Cryptoasset funds are not directly in scope since they do not act as VASPs however there are different rules for regulated funds to be able to market their services in the UK to specific types of investors (see PERG 8.37)



In the UK a person must not, in the course of business, communicate an invitation or inducement to engage in investment activity unless:

  • they are authorised to do so by the FCA or the communication is approved by a person authorised to do so (this is the general financial promotion restriction) or
  • it is an exempt promotion, for example, under the Financial Promotion Order (FPO).


From 8 October 2023, cryptoasset businesses that wish to offer or market cryptoassets to UK customers will need to be registered with the FCA under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017  (MLRs) to rely on an exemption in the FPO unless their financial promotions are approved by an authorised person or are otherwise lawful.

Breach of the financial promotion restriction is a criminal offence, and it may not be possible to enforce an agreement against a person who entered into it as a result of an unlawful financial promotion.

It is notable that, unlike other types of financial promotion, there is no exemption from the cryptoasset restriction for promotions to high-net-worth individuals and self-certified sophisticated investors. Firms seeking to properly categorise their clients must do so carefully to ensure they do not promote to retail customers.

Firms’ preparations to comply with the cryptoasset financial promotions regime – feedback on good and poor practice


Impact on Intermediaries

The regime also impacts service providers such as payment companies and social media companies and advertisers to ensure that illegal financial promotions are not communicated to UK consumers by unregistered cryptoasset firms. In addition, the regime extends to persons who intermediate financial promotions or engage in controlled activities (such as advisors, and persons arranging investments in cryptoassets).

Service providers risk committing money laundering offences under the Proceeds of Crime Act 2002 (POCA) if they support unregistered cryptoasset firms in making financial promotions or undertaking unlawful activity:

Unregistered cryptoasset firms do not operate in isolation. They are supported and facilitated by a host of intermediaries who play a critical role in enabling these firms to target UK consumers. For example:

• Social media platforms and search engines enable ads to be targeted at UK consumers.

• App stores and domain name registrars host apps and websites, which are often the main form of communication with UK consumers.

•  Payments firms enable consumers to invest money with these firms.

All these intermediaries have a crucial role to play in protecting UK consumers from illegal promotions. We expect these firms to play their part in ensuring that illegal financial promotions are not communicated to UK consumers by unregistered cryptoasset firms.” (FCA Final Warning Letter)

In addition, if your business model involves receiving economic benefits to encourage persons to invest in crypto assets (I note that there are many persons using affiliate links on social media platforms including X and Youtube)  then you can also be caught even if you are not directly providing the cryptoasset custody or investment service:

“A hypertext link may or may not be a financial promotion in itself. This will depend on the nature of the hypertext link and the context in which it is placed. However, taken in isolation, a hypertext link which is purely the name or logo of the destination will not be a financial promotion in its own right. More sophisticated links, such as banners or changeable text, may be financial promotions. This will depend upon the facts in each case.

…In some cases, however, the operator (‘O’) of a website which hosts a link to another website, may be causing the communication of a financial promotion on that other website. This will only arise when O has made arrangements with the operator of the other website under which O is to procure users of his site to access the link provided with a view to their engaging in investment activity.” (FCA – PERG, 8.22)


What crypto assets are in scope? 

The cryptoasset restriction applies only to cryptoassets that are both fungible and transferable (such as tokens and cryptocurrencies). It does not extend to non-fungible tokens or e-money. NFTs are currently treated as collectibles rather than financial investments.

Cryptoassets that meet the criteria of one of the other types of controlled investment, or electronic money or fiat currency will not constitute qualifying cryptoassets.

Cryptoassets that can only be used in a limited way are also excluded – the criteria are in line with those of the limited network exclusion that applies in relation to payment services.

The new rules are contained in PS23/6: Financial promotion rules for cryptoassets.

  • Crypto assets have been classified as ‘Restricted Mass Market Investments’.
  • This categorisation allows cryptoassets to be mass marketed to UK consumers subject to certain restrictions, in addition to the overarching requirement that financial promotions must be fair, clear and not misleading.
  • The restrictions proposed included: clear risk warnings, banning incentives to invest, positive frictions, client categorisation requirements and appropriateness assessments.


FCA Guidance

The FCA has also published a Guidance Consultation (GC23/1) for cryptoasset financial promotions.

The regime applies to financial promotions that are capable of having an effect in the UK.

Financial promotions are unlikely to be considered to be fair, clear and not misleading unless an offer or promotion sets out with sufficient clarity and prominence the:

  • proof of ownership of the underlying commodity/asset;
  • evidence of the underlying commodity/asset;
  • evidence of the custodian (if any) responsible for the underlying assets and the relationship with the issuer, including where the commodity/asset is held;
  • clear terms of redemption for consumers;
  • the risk the consumer will lose some or all of their money in the event the issuer becomes insolvent or otherwise fails;
  • any further reasonably foreseeable dependencies (and risks) that may significantly impact the value or volatility of the underlying asset.


Anyone who communicates a financial promotion for a cryptoasset should have sufficient evidence, and carry out due diligence, on the substance of a promotion and underlying cryptoasset before communicating it to accurately disclose risks to consumers in a way that is fair, clear and not misleading.

A firm may need to consider (amongst other things):

  • The authenticity and accuracy of the proposition described in the relevant promotion;
  • Ensuring the cryptoasset is not linked to fraudulent activity, scams, money laundering or other financial crime;
  • Understanding the operational or technological risks;
  • Understanding the environmental, social and governance risks associated with the cryptoasset;
  • Conducting relevant legal and compliance checks, such as whether they are satisfied that the cryptoasset does not constitute a specified investment and that their activities in relation to the cryptoasset do not constitute regulated activities for which permission or exemption under FSMA would be required.


The financial promotions regime will apply to all firms marketing cryptoassets to UK consumers regardless of whether the firm is based overseas or what technology is used to make the promotion.

  • Financial promotions do not need to be specifically directed at UK consumers to be capable of having an effect in the UK.
  • If a UK consumer can access and respond to cryptoasset promotions to engage in cryptoasset activities, such as through websites, apps and/or social media, it is likely that those promotions will be capable of having an effect in the UK.


The FCA has recently signalled that it will consider giving cryptoasset firms more time to implement certain changes, for instance, a 24-hour cooling-off period. Firms could be given until 8 January 2024 to introduce features that require greater technical development, with the core rules still coming into effect from 8 October 2023.

Financial incentives to purchase cryptoassets (including refer-a-friend bonuses) will be unlawful. The FCA rules do however clarify when an intrinsic benefit is permissible:

“We wish to clarify that we would not consider benefits that are intrinsic to the cryptoasset or exclusively bound up with its function and/or business model to be considered an ‘incentive’. This might include features or benefits that are part of the terms and conditions associated with a particular cryptoasset. For example, cryptoassets that serve to provide the owner with voting rights, and which are used for the purpose of establishing governance arrangements for a particular platform or project would not be considered an incentive.”


The 4 lawful routes for financial promotions

There are now only 4 routes to legally promoting cryptoassets to consumers:

  1. the promotion is communicated by an authorised person;
  2. the promotion is made by an unauthorised person but approved by an authorised person (a regulatory gateway permission is being made available for authorised firms wishing to approve financial promotions for unauthorised persons);
  3. the promotion is communicated by (or on behalf of) a cryptoasset business registered with the FCA under the MLRs in reliance on the exemption in Article 73ZA of the FPO;
  4. the promotion is otherwise communicated in compliance with the conditions of an exemption in the Financial Promotion Order.


MLR-registered cryptoasset businesses must carefully consider the scope of Article 73ZA and explicitly identify the entity within the group responsible for promoting cryptoassets to UK consumers:

  • 73ZA allows an MLR-registered cryptoasset business to communicate a relevant financial promotion or for another party to communicate a financial promotion on that firm’s behalf, subject to the conditions of the exemption;
  • financial promotions can only be made on behalf of MLR-registered firms where the MLR-registered firm has prepared the contents of the communication and it complies with our financial promotion rules;
  • MLR-registered cryptoasset businesses that are not FCA authorised cannot approve promotions on behalf of a third party;
  • other firms in their group will be committing a criminal offence if they communicate financial promotions to UK consumers without using 1 of the 4 legal routes available under the regime.


UK Consumer Duty

The UK recently introduced a new financial services Consumer Duty. This sets very high standards for retail consumer protection across financial services and requires firms to put their customers’ needs first.

The Duty consists of several features and rules related to ensuring that based on: products and services, price and value, consumer understanding, and consumer support.

The FCA have not (yet) extended the new Consumer Duty regime to firms registered under CARR though it does apply to authorised firms that make or approve financial promotions of cryptoassets.

The Consumer Duty regime will be brought fully into scope once there is a full authorisation regime in the UK for cryptoasset service providers.


Bona Fide UK Presence

interestingly, PS23/6 does not suggest that an overseas business is prohibited from being able to promote crypto assets as long as it is registered under the MLRs (i.e. rely upon 73ZA). Indeed, the Policy document might suggest overseas firms will not be precluded from doing so as long as it is a level playing field:

Our rules will help achieve a level playing field and prevent overseas firms, who may be currently subject to fewer regulatory standards, from undercutting UK firms with misleading advertising.” (1.22)

Our financial promotions rules are focused on ensuring UK consumers remain protected from misleading financial promotions, from both UK and overseas firms.” (6.51)

However, the FCA has made it clear that they expect a UK presence for those wishing to apply under the UK MLRs and the UK Cryptoasset AML registration regime (CARR) :

cryptoasset businesses to be ready, willing and organised at the point of their application. This includes having a bona fide UK presence as per Regulations 8 and 9.

The MLRs provide the following definition of carrying on business in the UK as is required to register under CARR:

9.—(1) For the purposes of these Regulations, a relevant person (“A”) is to be regarded as carrying on business in the United Kingdom in the cases described in this regulation even if A would not otherwise be regarded as doing so.

…The second case is where—

  • A’s registered office (or if A does not have a registered office, A’s head office) is in the United Kingdom; and
  • the day-to-day management of the carrying on of A’s business is the responsibility of—

(i) that office, or

(ii) another establishment maintained by A in the United Kingdom.

Notably, the MLRs do not assist us with the meanings of ‘registered office’, ‘head office’ or ‘day-to-day management’ so we must consider other legislation and guidance. This area of law is primarily derived from tax law which is itself not always defined in legislation.

In any event, the financial promotion route for AML-registered entities will likely require a UK company or a desire for a foreign company to be deemed to be a UK company for regulatory purposes.

It is not therefore clear how useful the current FCA flow-chart is in determining whether a person is carrying on business in the UK for the purposes of making a registration. The flowchart suggests a wider test of UK nexus than the narrower test in the MLRs which the FCA now appear to be stating is the relevant test.


UK tax implications

Given the UK presence requirements: it could be hard to argue that a foreign registered company was doing business in the UK for registration under the MLRs and yet not be UK tax resident on worldwide income or not established in the UK for VAT purposes.

Under the basic rules of UK corporate residence, a company is UK tax resident (in respect of its worldwide activities) if it is incorporated in the UK, or if its central management and control is in the UK.

For VAT purposes, a head office is usually considered a business establishment with a degree of permanence. It is where the functions of the business’s central administration are carried out, with sufficient support to deliver services (from a technical and human resources perspective).

We, therefore, expect firms to apply for registration under CARR and the MLRs using a UK company. It is unclear whether a branch registration of an overseas company would be permissible under CARR.

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