.svg)
The UK’s Broadcast Committee of Advertising Practice (BCAP) has introduced a new rule on restricting the broadcast of certain crypto-asset advertisements to general audiences.
The rule specifically targets fungible and transferable crypto-assets, such as cryptocurrencies and utility tokens, which have been classified by the Financial Conduct Authority (FCA) as restricted mass market investments since 2023.
Under the new BCAP rule, crypto-asset advertisements must be directed only at audiences with relevant trading experience, and ads can only appear on specialised financial channels.
The move reflects a growing concern among UK regulators over the potential risks posed by crypto-assets to inexperienced investors, aligning closely with the FCA’s broader consumer protection goals.
The FCA has also issued revamped guidance on financial promotions on social media covering crypto ads, which includes attempts to tighten up on the role of so-called “finfluencers”.
The Bigger Picture
BCAP’s new advertising restriction fits within the wider context of UK regulatory developments aimed at overseeing the rapidly growing crypto-asset market and building a more structured and protective framework for customers in relation to crypto-assets.
This work builds on HM Treasury’s efforts to integrate crypto-assets into the UK’s financial services framework, representing a significant step in creating a balanced environment for both innovation and consumer protection. These proposals follow on from the Financial Services and Markets Act 2023, which is reshaping how crypto-asset activities are governed within the UK’s financial services landscape.
Rather than creating a standalone regime for crypto-assets, the UK has chosen to regulate these digital assets by incorporating them into existing financial services laws. This layered approach simplifies oversight while ensuring that crypto-assets are treated in line with other financial products, helping to bring greater stability and transparency to the market.
The FCA has introduced several measures, such as applying money laundering regulations to crypto-asset exchanges and custodian wallet providers, banning the sale of crypto-assets-backed derivatives to retail consumers, and extending financial promotion restrictions to most crypto-assets.
BCAP’s new advertising rule serves as a complementary measure to these wider regulatory objectives. By limiting the broadcast of crypto-asset ads to informed investors, BCAP is aiming to ensure that high-risk investments are promoted responsibly, aligning with the FCA’s mission to protect retail investors from potentially dangerous financial products.
Why Should You Care?
For crypto-asset firms, this is a notable shift in how they can approach advertising and investor outreach. The mass appeal of crypto-assets, previously driven by widespread advertising, will now be curtailed by the requirement for more targeted campaigns. This limits the potential for payments services providers to incur widespread liability and damages as a result of crypto scams.
However, this also means that firms are reaching more qualified investors, which could ultimately lead to a more stable and sustainable market. Crypto firms must ensure that their advertisements only reach financially literate individuals who have passed the FCA’s pre-vetting process. Although this narrows the potential audience, it ensures that only those with sufficient understanding of high-risk crypto products are targeted. This shift towards more targeted, compliant marketing strategies is also crucial for avoiding regulatory penalties and ensuring responsible promotion of crypto-assets in the UK.
Although some firms see the regulations as necessary to build long-term credibility, industry associations such as the Personal Investment Management & Financial Advice Association (PIMFA) note that increased regulation, especially in marketing, could create a “halo effect”, misleading consumers into thinking that crypto-assets are low-risk investments.
For consumers, especially those with limited financial expertise, BCAP’s rule brings much-needed protection. By restricting access to crypto-asset ads, the FCA and BCAP aim to reduce the likelihood of uninformed individuals making high-risk investments. The pre-vetting process adds an additional safeguard, ensuring that only those who meet strict financial literacy criteria can engage with crypto-asset opportunities.
This rule, along with HM Treasury’s proposals, signals a growing regulatory commitment to ensuring that crypto-assets are marketed and used in a responsible manner. The UK’s approach is designed to protect consumers while still enabling the development of the crypto sector within a clear and robust regulatory framework.
What's Next?
BCAP’s restriction on crypto-asset advertisements, effective from September 27, 2024, is a key development in the UK’s evolving regulatory landscape for crypto-assets. By limiting ads to specialised financial audiences, BCAP aligns its rules with the FCA’s broader goals of protecting retail investors and promoting responsible marketing of high-risk financial products.
It also represents a further step aligned to HM Treasury’s pending legislation to bring crypto-assets into the UK’s regulatory perimeter for financial services, with legislation expected in 2024, subject to parliamentary time.
For crypto-asset firms, advertisers and broadcasters, the evolving regulatory environment presents both challenges and opportunities. Navigating this landscape will require close attention to compliance requirements, but it will also create a safer and more transparent market for both investors and firms.
