Recommendation 44

HM Government · verbatim extract Acknowledged

The government notes the committee’s support for HM Treasury’s recent announcement of its intention to regulate cryptoasset financial promotions. FCA consumer research conducted in 2021 indicated that cryptoasset ownership in the UK has continued to grow, with an estimated 2.3 million people in the UK holding cryptoassets. As more people decide to invest, it is essential that consumers have access to fair, clear, and not misleading information prior to any purchase. The government’s approach to this topic as well as our wider strategy for cryptoasset regulation was set out in the Economic Secretary’s keynote speech during Fintech week on 4 April. 16 On 18 January 2022, the government set out its intention to legislate later this year to bring certain cryptoassets into financial promotion regulation. The measure, and supportive FCA rules, will regulate in-scope cryptoasset financial promotions, requiring them to be fair, clear and not misleading. This is aimed at improving consumers’ understanding of the risks and benefits associated with cryptoasset purchases and ensuring that cryptoasset promotions are held to the same high standards as broader financial services products. The decision to expand the scope of the Financial Promotion Order to capture certain cryptoassets complements broader proposals on cryptoassets and stablecoins set out via the government’s consultation on a regulatory framework for stablecoins last year. 17 It also aligns with separate government proposals to strengthen the authorisation process for financial promotions. The government will also bring forward further legislation to enable cryptoassets to be seized and recovered more quickly as soon as parliamentary time allows. In particular, the creation of a civil forfeiture power which would mitigate the risk posed by those that cannot be prosecuted but use their funds to further criminality.