Section 21 Approver: How Englebert is Helping Approve Crypto Promotions in the UK

The UK has strict rules about how crypto companies can advertise their products. Section 21 approval is a key step for crypto firms wanting to promote their services in the UK. Without respecting it, they quickly end up with fines, legal penalties, or even outright bans. 

At Englebert, we have been helping crypto companies navigate these rules. We have permission from the Financial Conduct Authority (FCA) to approve crypto ads and have been doing so with great success. 

On 8 October 2023, the rules changed. Now, anyone wanting to promote crypto in the UK must follow the newly outlined guidelines. As a result, we are stepping up to help companies meet these new demands.

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Understanding Section 21 Approval 

Section 21 of the Financial Services and Markets Act 2000 (FSMA) is aimed at communication (i.e. an invitation) regarding an investment activity. Essentially, the communicator must be authorised. Or, the content is approved by an authorised entity.

This law applies to all financial promotions, including those for crypto assets. It aims to protect consumers from misleading or inappropriate financial promotions.

Section 21 approval allows businesses to promote investment opportunities to a wider range of potential investors, not just those certified as high net worth or sophisticated investors. This greatly increases the chances of attracting investment, particularly when it comes to crypto, which is weighted more towards retail investors compared to traditional investments.

Financial promotions can be any type of communication, from Tweets, blog posts, presentations, and newsletters.

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The Crypto Promotion Landscape in the UK 

The UK's approach to crypto promotion has become much stricter in recent years. The FCA now treats crypto assets similarly to other financial products when it comes to marketing rules, and it also acknowledges its risks.

All crypto promotions in the UK must be “clear, fair, and not misleading”. They must also include prominent risk warnings and cannot promise unrealistic returns.

The FCA has been very active in enforcing these rules. In February 2024, they issued over 450 alerts about illegal crypto ads in just three months. This shows how seriously they are taking the issue of non-compliant promotions.

Crypto companies face significant challenges in promoting their products and services while staying within these rules. Many have had to pause or change their UK marketing activities to avoid breaking the law.

The difficulty of crypto promotions is three-fold. Firstly, it’s often inherently high-risk, meaning promotions need disclaimers and to tread carefully. Secondly, crypto has only just been accepted into these new rules, so everything is still in its infancy. Thirdly, crypto is complicated and many people do not understand it. So, promotions need to be extremely clear and not assume prior knowledge, which is tricky because some enthusiasts know a lot. The audience is broad.

The new rules have also created a need for experts who understand both crypto and financial promotion regulations. This is new ground, and it’s where companies like Englebert come in.

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Bridging the Gap Between Crypto and Compliance 

Englebert is a regulatory services firm that combines expertise in law, regulation, crypto and finance. We are a relatively new firm, but we’ve managed to use that to our advantage…

Englebert has received authorisation from the FCA to approve crypto asset promotions in the UK. Because these rules are so new, there aren’t actually too many approved firms around.

Our team includes legal and c-suite professionals with backgrounds in both crypto assets and traditional investments. This unique mix of expertise allows us to understand the novel challenges of promoting crypto products within a strict regulatory framework.

Englebert operates at what we call "the complex intersection of crypto assets, law and regulation". Our goal is to enable crypto companies to achieve regulatory compliance while still effectively promoting the services.

Englebert's services go beyond just approving promotions, though. We also offer due diligence services to help companies know who they're working with in the crypto space, and assistance in recovering lost digital assets. Ultimately, we are equipped to be a holistic consultant for web 3.0 and crypto projects. And, being young, we have something to prove…

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Englebert's Approach to Section 21 Approval 

Englebert takes a thorough approach to approving crypto promotions under Section 21. We review all promotional materials to ensure they meet the FCA's standards.

The process starts with a detailed assessment of the crypto company and its products or services. Englebert's team looks at the company's business model, the specifics of the crypto asset being promoted and the target audience for the promotion.

Next, we review the content of the promotion itself. This includes checking that all required risk warnings are present and prominent, that any claims about potential returns are realistic and properly explained, and that the overall tone and content of the promotion are appropriate for the intended audience.

Of course, getting promotions right before handing it over to us is ideal for both parties—it saves time and makes things more efficient. This is why we offer training too, so that employees stretching into different departments can understand the landscape better.

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Benefits of Working With Englebert for Crypto Promotions 

Working with Englebert offers several benefits for crypto companies looking to promote services in the UK

1. Many Section 21 approvers lack a deep understanding of crypto which can pose problems. But Englebert has expertise in both crypto and traditional finance, ensuring you remain compliant. 
2. FCA authorisation to approve crypto promotions, providing a direct path to compliance.
3. Time and cost efficiency as Englebert's expertise can help avoid costly mistakes.
4. Reduced regulatory risk as all promotions are carefully checked for compliance before approval.
5. Enhanced credibility in the UK market, as working with an FCA-authorised Section 21 approver with crypto expertise can boost trust among potential customers.
6. Ongoing support and monitoring to ensure continued compliance as regulations evolve.
7. Access to additional services like due diligence, digital asset recovery, and training to comprehensive support.

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Final Word

As the UK tightens its rules on crypto promotions, companies like Englebert play a crucial role in staying on top of these changes. We aim to help crypto businesses stay on the right side of the FCA while still reaching their audience effectively. To get the ball rolling, please get in touch with a member of the Englebert team.

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