The Draft Legislation released on 27 March 2023 proposed to bring certain cryptoassets into the scope of financial promotions to improve consumers' understanding of the risks associated with cryptoasset investments and ensure a level playing field.
The proposal builds on the HM Treasury consultation paper published July 2020 (see our previous update here). The Draft Legislation will amend the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (‘FPO’) and introduce a new type of instrument identified as qualifying cryptoasset and defined as : “any cryptographically secured digital representation of value or contractual rights that is— (a) fungible; and (b) transferable…”.
The definition of qualifying cryptoasset excludes certain instruments such as electronic money, fiat currency, digitally issued fiat currency; or a cryptoasset that cannot be transferred or sold in exchange for money or other cryptoassets, except by way of redemption with the issuer.
FCA authorised firms will have to ensure compliance with the regulatory requirements by, amongst others, highlighting the risks related to qualifying cryptoassets.
Non-FCA authorised firms will have to ensure that the promotion of these instruments is approved by an authorised firm.
Firms will have a 4-month implementation period once the Draft Legislation comes into effect.