news.bitcoin.com
As a lawyer (not yours), I spend a good chunk of my time explaining to businesses why they need to pour half their budget into compliance instead of, you know, actually building something useful. But even in the bureaucratic maze I call my profession, few things have been as spectacularly counterproductive as the UK’s Financial Conduct Authority (FCA) and its financial promotion (finprom) rules for crypto.
The following opinion editorial was written by Joseph Collement, Chief Legal Officer at Bitcoin.com.
These rules, introduced in October 2023, were supposed to protect consumers from misleading crypto advertisements. Sounds noble, right? In practice, however, they have created a compliance nightmare that stifles innovation, benefits entrenched players, and pushes users toward dodgy offshore platforms where they are more likely to get scammed.
The UK’s Very Own Ministry of Truth
Let’s start with the most Orwellian aspect of all: the FCA now requires that all communications deemed “financial promotions” be pre-approved by a Section 21 approver—one of a small group of FCA-vetted firms that effectively act as the UK’s Ministry of Truth for crypto. That’s right, crypto companies can no longer speak directly to their audience; they must first pass their messages through a government-approved filter. Forget free markets—this is financial speech control, and it’s as absurd as it sounds.
Lawyers Are Scratching Their Heads
Worse still, no one actually knows the full scope of what constitutes a “financial promotion.” In practice, businesses are terrified of accidentally stepping out of line. Companies are now playing a never-ending game of regulatory Minesweeper, trying to guess which tweet, blog post, or website update might trigger a fine or enforcement action. The only certainty? Lawyers are making a killing.
And the insanity doesn’t stop there. The finprom rules apply not just to firms handling transactions, but to anyone who so much as whispers the word “crypto” in the general direction of a UK resident. Third-party publishers, influencers, and even casual bloggers can be caught in the regulatory dragnet, even though they’re not entering into any financial transactions with Brits. If you so much as tweet, “Hey, check out this crypto exchange,” congratulations—you might be violating FCA rules.
A Gift to Scammers and Offshore Platforms
Then there’s the so-called cooling-off period, which forces new users to wait 24 hours before engaging with a crypto platform. The idea? To prevent impulsive decisions. Again, noble in theory. The reality? It just encourages people to bypass the system entirely and sign up with unregulated platforms that don’t impose these delays. Instead of protecting consumers, the FCA is basically herding them straight into the arms of scammers.
For crypto companies actually trying to comply, the logistical burden is staggering. Many have had to create separate UK-specific websites, social media channels, and apps, an expensive and time-consuming process that serves no real purpose other than keeping lawyers and compliance consultants well-fed. Meanwhile, smaller startups—the ones trying to build genuinely useful, consumer-friendly products—are either drowning in legal fees or simply leaving the UK altogether.
And that, right there, is the real outcome of these rules. Not consumer protection. Not market integrity. Just fewer choices, higher costs, and an industry that increasingly belongs to the slowest, biggest, and most regulation-loving firms. The exact opposite of what crypto was meant to be.
Who’s Actually Winning Here?
Right now, certainly not UK consumers, who now have fewer legitimate options and more incentive to seek out riskier alternatives. Certainly not crypto startups, which are being squeezed out before they even get a chance to prove themselves. The only real winners? Compliance consultants, lawyers (again, thanks for the business), and traditional financial institutions that would rather see crypto die than compete with it.
The consequences of this bureaucratic circus are already unfolding. Many crypto firms looking to serve UK customers have either left the region or scrapped their expansion plans entirely.
Make no mistake, governments and regulators everywhere are likely taking notes, and if they’ve learned anything from the UK’s experiment, it’s exactly what not to do. So I have one simple question for the FCA: will you course-correct before it’s too late, or will you continue to serve as a cautionary tale for the rest of the world?