Treat crypto like gambling: Tips for compliant promotions in the UK | Opinion
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The UK Financial Conduct Authority’s new marketing rules for cryptocurrency were enacted in October 2023. To conduct promotional campaigns in the United Kingdom, crypto businesses need either an FCA-issued license or specific authorization from the watchdog. While the rules for obtaining a license are not fully defined, crypto advertising without all necessary permissions can have negative consequences.
As a communications agency operating in the British market, we would like to offer recommendations on better interacting with the media in the new environment. I will draw from my personal experience as a media relations specialist and incorporate insights from our legal experts.
What has changed in the British crypto market
Cryptocurrency companies promoting their products to a British audience must adhere to the new UK’s FCA guidelines. Advertisements must be explicit, include prominent risk warnings, and avoid exaggerating claims.
Here comes the tricky part. To operate in the United Kingdom, cryptocurrency companies must obtain a license from the FCA or enter into an agreement with a licensed advertising provider. However, the rules for licensing crypto advertising providers have yet to be released. In the second half of 2024, the UK is holding general elections, and the Labour Party might come to power. As pressure mounts on the Conservatives, they still have time to make a lasting impact before the general election. In this regard, we may expect greater clarity regarding cryptocurrency regulation in the coming months.
Obtaining the FCA license is not simple or quick. Without a license, crypto projects do not know how to interact correctly with the media in the right way to avoid damaging their reputation and being banned by the authorities.
Approving financial promotions without a license
Starting from Feb. 7, 2024, all companies registered outside the UK must apply for financial advertising campaign approval. Businesses without FCA licensing are considered ‘unauthorized persons’ and require authorization to advertise to British audiences.
Learn about the approval procedure on the official FCA website. Applying for authorization involves thoroughly reviewing existing norms and careful application preparation. This approval is unnecessary if you advertise your project through agencies with the necessary permissions.
How to deal with the new reality
First, let me give you some general advice. It may seem obvious, but adhering to this principle in the new regulatory reality could save you customers, reputation, and money.
Before launching a new promotional campaign, contact the media and inquire whether their policy has changed. News outlets and PR agencies closely follow all the changes and can advise you on what to say, where to adjust wording, and what to avoid. This way, you can launch an advertisement that fully complies with all the guidelines.
I know how important this communication can be for the media, as I previously worked as a CMO in a gambling media group. When countries introduced new regulations for gambling ads, our media had to deal with legal issues: updating license codes and sales charts. All promotional articles went through lawyers, and the editor rewrote client materials.
What we do to start compliant ad campaigns
The main requirement from the FCA regarding crypto advertising is that it must be “clear, fair, and not misleading.” General guidelines are very close to those used for regulating ads in gambling and other high-risk activities. Here are some principles that we stick to while creating promotional campaigns for crypto projects:
- Bold risk warnings. We include clear risk warnings associated with investing in crypto assets, such as high volatility, lack of regulation, and potential for fraud.
- Use balanced presentations. We don’t overstate the potential benefits of crypto assets while downplaying the risks. They should provide a balanced and objective view of investments.
- Do careful targeting. We aim to reach the appropriate audience that understands the associated risks. We don’t target vulnerable consumers and avoid making misleading statements about the suitability of crypto assets for everyone.
- Use unambiguous language. Messages should be concise and easily understandable, avoiding jargon and technical terms the target audience may not understand.
The FCA provides examples of good and bad practices in promoting crypto projects on its website.
Lawyers’ comment
Oleksandr Rudakov, Senior lawyer at SBSB Fintech Lawyers, suggests that aggressive strategies should be abandoned in PR and advertising on UK channels and that classical organic PR should be used. He recommends providing the media with information that will be important for the industry and avoiding anything considered manipulative for market participants.
Another piece of advice is to replace advertising with creative campaigns. Oleksandr emphasizes that those should be meaningful for the industry, as the interaction may involve people unfamiliar with crypto. If someone suffers due to inexperience, you will have a bad case that will be used against you. Advertising should work for your reputation, trust, and brand awareness here.
Complying with new rules to stay safe
On Oct.10, 2023—just four days after the new regulations about crypto advertisement and promotions came into effect—the FCA announced that Binance’s UK partner, Rebuildingsociety.com, cannot approve crypto ads. Binance was forced to stop accepting new UK users to comply with ad rules.
Failure to comply with the new ad guidelines can attract the watchdog’s attention and lead to the suspension of promotional activities. Sticking to the new rules is necessary to avoid losing money and successfully operating in the UK crypto market. Make sure to only work with licensed ad providers and prioritize clarity in your promos to maintain trust and credibility with regulators and consumers.
