HM Government has published a Consultation on its proposal to expand the perimeter of the financial promotions regime to include cryptoasset promotions. The Financial Services and Markets Act 2000 (“FSMA”) provides the financial promotions regime in the U.K. Section 21 of FSMA contains the financial promotion restriction, which provides that an unauthorised person must not “communicate an invitation or inducement to engage in investment activity or claims management activity”. The Cryptoasset Promotions Proposal, if adopted, will apply the restriction to unregulated cryptoassets.
For this purpose, the Cryptoasset Promotions Proposal sets out a definition of a “qualifying cryptoasset”. The FMLC has submitted a response to the Consultation to draw attention to concerns with regards the definition. First, it has highlighted that certain terms in the definition, such as “fungible” and “transferable”, may not offer the specificity and certainty required to determine which cryptoassets fall within the proposed regime.
The FMLC’s second observation relates more generally to attempts being made around the world to define cryptoassets for the purposes of regulation. The FMLC would encourage authorities to consider the uncertainty which might be caused by a proliferation of sometimes-conflicting or overlapping definitions.
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