The Financial Conduct Authority (FCA) recently released a finalised non-handbook guidance document on Cryptoasset Financial Promotions. This release came about as a response to observed lapses in adherence to the new laws surrounding crypto asset promotions, which came into effect on October 8, 2023.
On June 8, 2023, legislation regarding cryptoasset financial promotions was enacted, and subsequent rules were published under the identifier PS23/6. These rules emphasize the importance of fairness, clarity, and accuracy in financial promotions to avoid misleading the public. To ensure firms understand these requirements as they relate to crypto asset promotions, a consultation on proposed guidance was also issued.
After the consultation phase closed on August 10, 2023, the FCA reviewed the feedback and finalized the guidance, detailed in Chapter 2 of the document. Published on November 2, 2023, this finalised guidance does not introduce new obligations but clarifies the existing regulatory obligations of firms. Adherence to this guidance will be considered compliance with the relevant rules, although it is not mandatory.
Notably, the document introduces a secondary international competitiveness objective, activated on August 29, 2023. While this objective was not in effect when the final rules were published, its spirit was considered. This objective aligns with the broader policy of protecting consumers while encouraging beneficial innovation that supports long-term economic growth in the UK.
The main aim of the guidance is to mitigate consumer harm by clarifying firm expectations and promoting better compliance with the rules. By doing so, it aims to prevent the erosion of trust in financial services that may occur when consumers do not fully understand the risks associated with cryptoasset purchases. The guidance aims to provide clearer and fairer promotions, enabling consumers to make well-informed decisions that align with their risk profiles and needs.
Since the rules came into play, compliance has been reported to be disappointing. Some market participants have expressed intentions to exit the UK market due to perceived restrictions imposed by these laws. However, the FCA has been proactive in issuing multiple warnings and reminders since June 8.
Furthermore, certain significant technical benchmarks are scheduled for January 8, 2024. Amidst these developments, the FCA’s guidance also addresses the Travel Rule formulated by the Financial Action Task Force (FATF) and its implementation in the UK on September 1.
### News source: blockchain.news