UK Treasury Set Plan to Bring Crypto Ads Under Financial-Promotion Rules

HM Treasury said on January 18, 2022 that the United Kingdom would bring promotions for qualifying cryptoassets inside the existing financial-promotion regime. The decision was a policy commitment backed by the Treasury’s response to a 2020 consultation; it was not yet legislation, an FCA rule, or a general licensing system for cryptocurrency businesses.

The move mattered because it targeted the point where a largely unregulated product reached retail consumers. Once implemented, covered invitations or inducements would generally have to be communicated by an authorized person, approved by one, or fall within an exemption. Authorized firms would also have to meet the Financial Conduct Authority’s standard that promotions be fair, clear and not misleading.

What the January 18 policy covered

The Treasury’s provisional definition of a “qualifying cryptoasset” was a fungible and transferable, cryptographically secured digital representation of value or contractual rights. The response said that most previously unregulated exchange and utility tokens—including Bitcoin and Ether—would therefore be brought within financial-promotion rules.

The boundary was deliberately narrower than “all crypto.” Security tokens were already captured where they resembled regulated investments, while e-money tokens were governed separately. The proposed definition excluded central-bank money, electronic money, and tokens transferable only to specified vendors or merchants for goods and services. Non-fungible tokens were left outside the proposed perimeter because fungibility remained part of the definition. The Treasury called the definition provisional and said final statutory drafting could change.

The response also treated scope as activity-dependent. Dealing, arranging deals, managing investments, advising, and agreeing to conduct specified activities were among the controlled activities the government intended to extend. Crypto lending and decentralized-finance promotions could fall inside the regime in some circumstances, but the Treasury said that assessment would be case by case. Promotions solely for custody services were not intended to be captured through a new custody-specific controlled activity.

Why advertising had become a regulatory priority

The institutional case relied partly on FCA consumer research published in June 2021. An online survey fielded from January 5 through January 24, 2021 used a nationally representative sample of 2,568 adults plus a separate boost sample of 994 current or former crypto users. The FCA estimated that 4.4% of UK adults, about 2.3 million people, held cryptocurrency, up from an estimated 3.9% in its prior study.

Those figures were survey estimates, not exchange-account or blockchain counts. The FCA also reported that 78% of adults had heard of cryptocurrency, while 71% of those aware selected the correct definition, four percentage points below the prior survey. Among crypto owners who had encountered an advert, 31% said advertising had encouraged or led them to buy. The research established a consumer-risk rationale; it did not prove that any particular promotion caused a loss.

What had not happened yet

January 18 established government intent and a proposed perimeter. The Treasury said secondary legislation would amend the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 when parliamentary time allowed. It anticipated an approximately six-month transition after both the amended order and complementary FCA rules were finalized and published, and said the FCA would consult on those rules.

Accordingly, the announcement did not immediately make every crypto advertisement unlawful, approve any token, regulate crypto trading generally, or create price protection. Contemporaneous Reuters reporting independently described the planned shift and noted the existing surge in crypto advertising, but the operative details remained those in the Treasury record.

The defensible January 18 conclusion was therefore limited but consequential: Britain had chosen to use a familiar gatekeeping system for financial marketing to reach fungible cryptoassets that largely sat outside that system, while leaving implementation, final definitions, exemptions and FCA rule design to later legal steps.