FameEX Hot Topics | HM Treasury Releases Draft Statutory Order to Regulate Marketing of Cryptocurrencies in UK

HM Treasury has released a draft statutory order proposing significant regulatory changes to the marketing of cryptoassets in the UK. This move marks a substantial step forward in the formal regulatory oversight of crypto marketing in the country. The proposed changes will apply marketing rules to cryptoassets, including Bitcoin and Ether, but not to non-fungible tokens (NFTs).

Businesses with Money Laundering Regulations (MLR) registration for crypto will be able to benefit from an exemption for their own marketing and for third-party marketing. However, the exemption will be subject to conduct rules established by the Financial Conduct Authority (FCA), including the requirement that promotions must be “fair, clear, and not misleading.”The new rules will affect all unregulated crypto businesses, regardless of their location. UK-based businesses with MLR registration can rely on the exemption, but others will need to seek licensing in the UK or have their marketing communications approved by a regulated firm. However, the new “section 21 gateway” may make this more challenging for regulated firms.

Crypto businesses that are authorized institutions in the UK will not require an additional license as a result of these new rules. Nevertheless, they will need to include marketing communications concerning their crypto business within their financial promotions compliance framework.

The proposed order aims to ensure that cryptoasset promotions are held to the same standards as those for other financial services products as part of a forthcoming package of changes to align regulation of cryptoassets and cryptoasset services more closely with the financial services regime. The FCA intends to expand its recent changes to higher-risk financial promotions to include crypto financial promotions when the order takes effect.
Until now, crypto businesses in the UK have generally not been subject to formal regulatory oversight, with the Advertising Standards Authority overseeing items not falling under the traditional financial services regime. The draft statutory order represents a significant change for these businesses, bringing them more closely in line with the marketing of other financial services products.

It remains to be seen how the crypto industry will respond to these new rules and how effective they will be in ensuring fair and transparent crypto marketing in the UK. Overall, the draft statutory order is a step forward in the regulation of crypto marketing in the country, providing a framework for oversight and alignment with wider financial services marketing.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.