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The UK Financial Conduct Authority's new marketing rules for virtual currencies were established in October 2023. To run a promotional campaign in the UK, a virtual currency business requires either his FCA-issued license or special permission from a supervisory authority. Although the rules for obtaining a license are not fully defined, crypto advertising that does not have all the necessary permissions can have negative consequences.
As a communications agency operating in the UK market, we want to provide advice on how to better interact with the media in the new environment. I draw on my personal experience as a media relations professional and incorporate insights from legal experts.
What has changed in the UK cryptocurrency market?
Cryptocurrency companies promoting their products to UK audiences will have to follow the UK's new FCA guidelines. Advertising must be explicit, include prominent risk warnings, and avoid exaggerated claims.
Now comes the tricky part. To operate in the UK, crypto companies must either obtain a license from the FCA or enter into a contract with a licensed advertising provider. However, rules regarding the licensing of crypto advertising providers have not yet been announced. A general election will be held in the UK in late 2024, with the Labor Party likely to come to power. As pressure mounts on the Conservatives, there is still time to make a lasting impact before the general election. In this regard, we may expect more clarity in the regulation of cryptocurrencies in the coming months.
Obtaining an FCA license is neither easy nor quick. Without a license, crypto projects do not know how to interact with the media in an appropriate manner to avoid damaging their reputation or getting banned by authorities.
Approve financial promotions without a license
From 7 February 2024, all businesses registered outside the UK will need to apply for financial advertising campaign approval. Companies without an FCA license are considered “unauthorized persons” and need permission to advertise to UK audiences.
Please visit the FCA's official website for approval instructions. Applications for authorization require a thorough review of existing standards and careful preparation of the application. This approval is not required if you promote your project through an agency that has the necessary permits.
how to deal with new realities
First, some general advice. It may seem obvious, but adhering to this principle in new regulatory realities can save your customers, your reputation, and your costs.
Before starting a new promotional campaign, contact the media to find out if the policy has changed. News outlets and PR agencies are closely monitoring all changes and can advise you on what to say, where to adjust your language, and what to avoid. This way, you can start advertising in full compliance with all guidelines.
I previously worked as a CMO in a gambling media group, so I know how important this communication is for media. When countries introduced new regulations on gambling advertising, our media had to deal with the legal issues of updating license codes and sales graphs. All promotional articles went through lawyers, and editors rewrote the client's material.
What to do to start a compliant advertising campaign
The FCA’s main requirements for virtual currency advertising are that it be “clear, fair and not misleading”. The general guidelines are very close to those used to regulate advertising for gambling and other high-risk activities. Here are some principles we follow when creating promotional campaigns for crypto projects.
- A bold risk warning. We include clear risk warnings associated with investing in crypto assets, including high volatility, lack of regulation, and potential for fraud.
- Use a balanced presentation. We do not overstate the potential benefits of crypto assets while downplaying the risks. You need to provide a balanced and objective perspective on your investments.
- Please target carefully. We aim to reach the right audience who understand the risks involved. We do not target vulnerable consumers and avoid making misleading statements about whether crypto assets are appropriate for everyone.
- Please use unambiguous language. Keep your messages concise and easy to understand, and avoid jargon and jargon that your audience won't understand.
The FCA provides examples of good and bad practices when promoting cryptocurrency projects on its website.
Attorney's comment
Oleksandr Rudakov, senior lawyer at SBSB Fintech Lawyers, suggests that PR and advertising in UK channels should abandon aggressive strategies and use classic organic PR. He recommends providing the media with information that is important to the industry and avoiding anything that could be seen as manipulative by market participants.
Another piece of advice is to replace advertising with creative campaigns. Oleksandr emphasizes that interactions should be meaningful to the industry, as they may involve people who are not familiar with cryptocurrencies. If someone else suffers because of a lack of experience, you will be penalized. Here, advertising must work for reputation, trust, and brand recognition.
Comply with new rules to ensure safety
On October 10, 2023, just four days after new regulations on crypto advertising and promotion came into force, the FCA announced that Binance’s UK partner Rebuildingsociety.com would no longer be able to approve crypto advertising. Binance has been forced to stop accepting new users in the UK to comply with advertising rules.
Failure to comply with the new advertising guidelines may attract the attention of regulators and lead to suspension of advertising activities. Complying with the new rules is necessary to avoid losses and operate successfully in the UK crypto market. To maintain trust with regulators and consumers, work only with licensed advertising providers and prioritize promotional clarity.
