What is FinProm?
The new regulations are designed to protect customers and ensure they have all the information they need to help them understand the risks involved and navigate the world of crypto safely.
For FCA-registered crypto businesses such as Ramp, several new requirements have been implemented for when firms are promoting to UK-based customers. This includes:
No Incentives: FCA-registered crypto businesses are banned from offering incentives to UK-customers. This includes first-time purchase bonuses, referral incentives, cashbacks, discounts, or free gifts as a result of making a direct crypto asset purchase.
Clarity and Fairness: FCA-registered crypto businesses must ensure they are using language that is clear, fair, and not misleading, avoiding any unsubstantiated claims. For example, registered firms cannot (and should not) directly promise or hint at the possibility of ‘gains’ or an increase in value when talking about or promoting crypto assets.
Risk Warnings: FCA-registered crypto businesses must include specific risk warnings alongside financial promotions, on their websites and in their apps to identify the high risk nature of purchasing crypto.
A wide array of communications by FCA-registered crypto businesses are classified as financial promotions. These include:
- Social media posts, such as on X (formerly Twitter) and Facebook.
- Website content, including blog posts.
- Buy buttons and widgets.
- Direct email marketing.
- Use of influencers.
Why is FinProm important?
The FCA's new regulations aim to ensure fairness and transparency when promoting cryptocurrencies. These changes reflect the FCA's commitment to consumer protection and market integrity, balancing the need for innovation and growth in the crypto sector with the necessity of regulatory compliance.
Regulatory changes such as FinProm are a key component when thinking about mass adoption, it is extremely difficult to grow crypto adoption without regulatory bodies such as the FCA working with companies to eliminate bad actors and enhance the safety of the space for new participants.
Crypto businesses must adapt to these new regulations to maintain their operations within the UK market and service UK-based customers. This means building robust systems, safeguards and processes with the customer in mind.
What does FinProm mean for our UK-based users?
With the new FCA regulations, UK-based customers will now experience a more structured and secure environment when purchasing crypto assets. Here's what changes for you if you’re based in the UK:
Enhanced Risk Awareness: Customers will see explicit risk warnings and detailed summaries to better understand the risks associated with purchasing crypto assets. We would always encourage customers to also undertake their own research when purchasing crypto through Ramp.
Customer Categorization: All new and existing UK-based customers must now meet the criteria of one of the following categories to purchase crypto in the UK:
High Net Worth Investor (HNWI): A UK-based individual with an annual income over £100,000 GBP or net assets exceeding £250,000 GBP.
Restricted Investor: A UK-based individual who allocates less than 10% of their net assets annually to high-risk investments like cryptoassets.
Certified Sophisticated Investor: A UK-based individual with experience in private investments. This includes those who have invested in unlisted companies recently, held a director role in a company with at least £1 million GBP turnover, been part of an Angel investment network or syndicate in the past six months, or work in private equity or SME financing sectors.
Those UK-based customers not falling into one of these categories will no longer be able to purchase any crypto assets through Ramp.
Appropriateness Assessment: All new and existing customers based in the UK must now complete an assessment, typically via an interactive questionnaire in the Ramp widget, to confirm they have the necessary experience and knowledge to purchase crypto and understand the risks involved.
Customers have a defined number of attempts to pass the assessment; if they fail to pass the test within this limit, they will be permanently blocked from purchasing crypto through Ramp..
Additional Measures for New Customers only:
UK-based customers that are using Ramp for the first time should also expect a number of further measures to protect them:
- Personalized risk warnings for first-time investors to ensure they are fully aware of the risks.
- 24-hour cooling-off period before their first purchase to ensure the customer still wants to proceed with purchasing crypto through Ramp.
These measures are designed to enhance the safety and awareness of UK-based customers in the crypto asset market, and will be gradually rolled out to all existing UK customers before 08 January 2024
Ramp is dedicated to providing the safest pathway for customers looking to enter the web3 space, and we are extremely committed to doing so in the most responsible way possible. We are confident that working closely with regulators is the best way to help the crypto industry grow in a way that keeps users and their funds safe.
If you have any questions or concerns, please feel free to reach out to our customer support team who will be happy to provide you with answers.
Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong.