25 January 2022

HM Treasury brings crypto further within the scope of financial services regulation

On 18 January 2022, HM Treasury published the results of its July 2020 consultation on cryptoasset promotions, and confirmed that the UK government will introduce measures that will effectively bring a wider range of cryptoassets within the perimeter of the UK's financial services regime.


This will mean that financial promotions relating to "qualifying cryptoassets" must be made or approved by a UK authorised person (that is, someone authorised in the UK by the Prudential Regulation Authority ("PRA") or the Financial Conduct Authority ("FCA")) or fall under an existing exemption under the financial promotions regime. Anyone who is not regulated in the UK – even if based in another country – is likely to find it very difficult to promote qualifying cryptoassets to UK-based customers.

What has happened?

  • HM Treasury has indicated that it will extend the restriction of financial promotions set out in section 21 of the Financial Services and Markets Act 2000 ("FSMA") to apply to a newly defined category of "qualifying cryptoassets" which will be added to the list of controlled investments set out in the FSMA (Financial Promotion) Order 2005 ("FPO").
  • Secondary legislation will implement these changes when parliamentary time allows; once the FCA has also published its own updated rules there will be a six-month transition period before the extended financial promotions regime comes into force.
  • On 19 January 2022, the FCA published a consultation paper (CP22/2: "Strengthening our financial promotion rules for high risk investments, including cryptoassets") which outlines its proposed rules to implement HM Treasury's extended regime. As the FCA is consulting in parallel with the legislative process, the new regime could be finalised and introduced relatively quickly.

What will change?

How will the extended regime work?

What does the FCA propose?

Who can approve a financial promotion?

Next steps