On July 20, HM Treasury published two separate consultation papers related to proposed reforms to the regulatory framework for the approval of financial promotions under the Financial Services and Markets Act 2000 (FSMA). While separate, the government recommends that they are read in conjunction with each other.

In the first of the consultation papers, the government proposes to establish a regulatory “gateway” that authorized firms must pass through before they are able to approve the financial promotions of unauthorized firms. Any firm wishing to approve unauthorized firms’ financial promotions would first need to obtain the UK Financial Conduct Authority’s (FCA) consent.

The paper considers, among other things, two policy options to deliver the gateway:

  • Option 1 – restrict the approval of unauthorized firms’ financial promotions by imposing requirements on authorized firms.
  • Option 2 – specify the approval of financial promotions communicated by unauthorized persons as a “regulated activity” under FSMA.

The second consultation outlines the government’s proposal to expand the perimeter of the financial promotion regime to include certain types of cryptoassets.

To bring the relevant cryptoasset activities into scope of the financial promotion regime, the government proposes to amend the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (SI 2005/1529) (FPO) to include certain unregulated cryptoassets in the list of controlled investments and amend a number of the current controlled activities. The government considers that applying the financial promotion regime to too wide a range of cryptoasset activity could stifle innovation without a proportionate benefit to consumer protection. Accordingly, the proposed definition of “qualifying cryptoassets” (that is, the unregulated cryptoassets to be covered by the FPO as controlled investments) includes only those cryptoassets that are both fungible and transferable.

The consultations each close to responses on October 25, 2020.

The financial promotions consultation is available here.

The cryptoasset consultation is available here.