FameEX Hot Topics | Draft Statutory Order for Regulating UK Crypto Marketing Released by HM Treasury

HM Treasury has published a draft statutory order proposing key regulatory changes to the marketing of cryptoassets in the UK. The move marks a significant step forward in the formal regulatory oversight of crypto marketing in the country. The proposed changes include applying marketing rules to cryptoassets, such as Bitcoin and Ether, but not to non-fungible tokens (NFTs). Additionally, businesses with Money Laundering Regulations (MLR) registration for crypto can benefit from an exemption for their own marketing and for onward marketing by third parties. However, this will be subject to conduct rules set by the Financial Conduct Authority (FCA), including the requirement that promotions be “fair, clear, and not misleading.”

The new rules will affect all unregulated crypto businesses, whether based in the UK or not. UK businesses with MLR registration can rely on the exemption noted above, but others will need to seek to be licensed in the UK or rely on approval of their marketing communications by a regulated firm. However, the new “section 21 gateway” will make this more challenging for regulated firms. Crypto businesses that are authorized institutions in the UK will not need an additional license as a result of these new rules. However, they will need to fold in marketing communications in respect of 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 wider financial services products as part of a package of forthcoming changes to align regulation of cryptoassets and cryptoasset services more closely with the financial services regime. The FCA has stated that it plans to expand its recent changes to higher-risk financial promotions to crypto financial promotions when the order takes effect.
The new rules will represent a significant change for crypto businesses in the UK, which until now have generally not been subject to formal regulatory oversight. The Advertising Standards Authority has had oversight for items not falling in the traditional financial services regime.

Overall, the draft statutory order represents a step forward in the regulation of crypto marketing in the UK, bringing it more closely in line with the marketing of other financial services products. The FCA's expansion of its recent changes to higher-risk financial promotions to crypto financial promotions will represent a further change for crypto businesses when the order takes effect. It remains to be seen how the industry will react to these new rules, and how effective they will be in ensuring fair and transparent crypto marketing in the UK.

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