The Financial Conduct Authority could give cryptoasset firms until January 8, 2024 to implement the incoming marketing rules.
In response to industry readiness, the FCA has signaled it will consider giving cryptoasset firms more time to take the rules on board and introduce features that require greater development.
Rules designed to improve the clarity and accuracy of cryptoasset products' marketing will come into force on October 8.
However, while some firms could be given until January 8, 2024 to implement certain changes, for instance a 24-hour cooling off period.
Firms must first apply for the flexibility which would then allow them time to make the required back-office changes successfully, the authority explained.
It also stated that the rules and approach to implementation are aligned with the approach taken last year when the FCA introduced rules for marketing other high-risk investments.
FCA director of consumer investments, Lucy Castledine explained that from this October, crypto firms must market to UK consumers "clearly, fairly and honestly and they must provide risk warnings people understand"
They will additionally ban incentives like "refer a friend" bonuses.
Castledine said: "As a proportionate regulator, we're giving firms that apply a little more time to get the other reforms requiring technology and business change right.
"We'll maintain our close eye on firms during this extended implementation period."
This comes as earlier this year, the FCA warned companies which market cryptoassets to ensure they comply with the financial promotion regime.
In a letter in July, Victoria McLoughlin, head of market interventions in the digital assets team at the FCA, and Lucy Castledine, director of consumer investments at the regulator, said the UK government has now legislated to bring qualifying cryptoassets within the scope of the financial promotion regime.
That means from October 8 this year, all companies marketing cryptoassets to UK consumers, including those based overseas, will need to comply with the financial promotion regime.
The letter outlined the four routes to “lawfully communicate” cryptoasset promotions to UK consumers (which includes on websites, mobile apps, social media posts and online advertising).
Consumer benefit
From the deadline, the FCA has said that UK consumers will have much greater protection as cryptoasset firms' marketing must be "clear, fair and not misleading".
It must also be labelled with prominent risk warnings and must not inappropriately incentivise people to invest.
The authority added that these rules will strengthen how people are protected from the high risks associated with cryptoassets.
Consequences
The FCA additionally clarified that anyone who continues to promote cryptoassets to UK customers past the October deadline without complying with the rules, may be committing a criminal offence.
This could be punishable by an unlimited fine and/or up to two years imprisonment.
"We are concerned by the failure of many overseas and unregulated crypto firms to engage with us on the new rules," Castledine stated.
