United Kingdom: The changing regulatory landscape for crypto advertising

In brief

On 18 January 2022, HM Treasury confirmed that it will bring certain cryptoassets into the scope of the financial promotion regime. The Treasury's view is that the evidence of risks to consumers provides a strong case for intervention, and as such it intends to expand the scope of the Financial Promotions Order (FPO) to include cryptoassets. The Treasury's announcement was followed the next day by the launch of an FCA consultation on strengthening the financial promotion rules for high-risk investments, including cryptoassets.


Contents

These proposals also complement broader work by the Treasury to improve the financial promotion regime, including the proposed new regulatory gateway ("s21 Gateway") for authorised firms who approve the financial promotions of unauthorised firms ("s21 Approvers") and the consultation on reforms to the FPO exemptions for high net worth and sophisticated investors. The expansion of the FPO regime to include cryptoassets also sits within the Treasury's wider work on bringing cryptoassets within the regulatory perimeter, including its consultation on a regulatory regime for stablecoins (for more on those proposals, see our related alert).

The expansion of the FPO regime will introduce added complexity to the current regulatory approach to cryptoassets, with the boundaries of application drawn differently in each regime. Crypto businesses will soon need to navigate different and sometimes conflicting scopes of application with respect to the Treasury's proposed regulation of certain stablecoin service providers, the AML/CTF regime under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs), and the forthcoming FPO regime and the FCA's proposed financial promotion rules. For more on this complexity, see A mismatch in scope in the full alert.

In this alert, we consider the scope of the strengthened regime and proposed rules, and what they mean for crypto businesses.

Click here to access the full alert.


Copyright © 2022 Baker & McKenzie. All rights reserved. Ownership: This documentation and content (Content) is a proprietary resource owned exclusively by Baker McKenzie (meaning Baker & McKenzie International and its member firms). The Content is protected under international copyright conventions. Use of this Content does not of itself create a contractual relationship, nor any attorney/client relationship, between Baker McKenzie and any person. Non-reliance and exclusion: All Content is for informational purposes only and may not reflect the most current legal and regulatory developments. All summaries of the laws, regulations and practice are subject to change. The Content is not offered as legal or professional advice for any specific matter. It is not intended to be a substitute for reference to (and compliance with) the detailed provisions of applicable laws, rules, regulations or forms. Legal advice should always be sought before taking any action or refraining from taking any action based on any Content. Baker McKenzie and the editors and the contributing authors do not guarantee the accuracy of the Content and expressly disclaim any and all liability to any person in respect of the consequences of anything done or permitted to be done or omitted to be done wholly or partly in reliance upon the whole or any part of the Content. The Content may contain links to external websites and external websites may link to the Content. Baker McKenzie is not responsible for the content or operation of any such external sites and disclaims all liability, howsoever occurring, in respect of the content or operation of any such external websites. Attorney Advertising: This Content may qualify as “Attorney Advertising” requiring notice in some jurisdictions. To the extent that this Content may qualify as Attorney Advertising, PRIOR RESULTS DO NOT GUARANTEE A SIMILAR OUTCOME. Reproduction: Reproduction of reasonable portions of the Content is permitted provided that (i) such reproductions are made available free of charge and for non-commercial purposes, (ii) such reproductions are properly attributed to Baker McKenzie, (iii) the portion of the Content being reproduced is not altered or made available in a manner that modifies the Content or presents the Content being reproduced in a false light and (iv) notice is made to the disclaimers included on the Content. The permission to re-copy does not allow for incorporation of any substantial portion of the Content in any work or publication, whether in hard copy, electronic or any other form or for commercial purposes.