The FCA has warned cryptoasset promoters they could face up to two years in prison and unlimited firms if they do not comply with new rules on the marketing of crypto which - it has confirmed -will begin on 8 October.

The new rules will apply to all promoters of cryptoassets who market to UK investors.

The regulator has written to cryptoasset firms to alert them to the fact that 'robust' regulation of the marketing of cryptoassets will begin from 8 October.

The letter has been sent to cryptoasset firms by Victoria McLoughlin, FCA head of department, market interventions - Digital Assets Supervision, Policy and Competition and Lucy Castledine, director, Consumer Investments Supervision, Policy and Competition.

From 8 October all firms marketing cryptoassets to UK consumers, including firms based overseas, must comply with the new cryptoasset financial promotion regime.

Financial promotions covers websites, mobile apps, social media posts and online advertising.

Financial promotions sent from outside the UK, but which are capable of 'having an effect' in the UK, are within scope of the regime.

The FCA said it expected nearly all cryptoasset firms marketing to UK consumers to fall under the remit of its new rules.

There will be four legal routes to market cryptoassets in the UK:

1. A promotion communicated by an authorised person
2. A promotion made by an unauthorised person but approved by an authorised person
3. A promotion communicated by a cryptoasset business registered with the FCA under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs)
4. A promotion that otherwise complies with the conditions of an exemption in The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 

The FCA has warned that any promotions with fall outside these rules will be in breach of section 21 of the Financial Services and Markets Act 2000 (FSMA) and this is a criminal offence punishable by up to 2 years imprisonment, an unlimited fine, or both.

The letter warns: “We will take robust action against persons illegally promoting to UK consumers. This may include, but it is not limited to, placing firms on our warning list, taking steps to remove or block any illegal financial promotions such as websites, social media accounts and apps, and enforcement action.”

The FCA expects most cryptoasset promoters to be registered via its money laundering regulations.

The FCA is also sending a questionnaire to cryptoasset firms to find out more about their businesses and products.