Navigating the Financial Promotion Landscape for Cryptoasset Marketing in the UK

BABB
3 min readDec 29, 2023

As of January 8, 2024, all registered cryptoasset firms, including BABB, will be stepping into a new regulatory landscape as the financial promotion regime comes into effect. This regime, legislated by the UK Government, expands the scope of the financial promotion regime to include qualifying cryptoassets. It is crucial for firms marketing cryptoassets to UK consumers, both domestically and abroad, to understand and adhere to the regulations to ensure compliance. In this article, we’ll delve into the key aspects of the financial promotion regime, shedding light on elements such as the appropriateness test and investor profile, essential for maintaining transparency and fostering responsible engagement with cryptoassets.

Appropriateness Test & Investor Profile

As crypto asset firms gear up for the impending financial promotion regime, understanding the appropriateness test and investor profile becomes paramount. The appropriateness test is designed to evaluate the suitability of crypto asset promotions for individual investors, ensuring that they align with investors’ knowledge, experience, and risk tolerance. This test serves as a protective measure, aiming to safeguard investors from exposure to cryptoassets that may not align with their financial situation or investment goals.

Simultaneously, the investor profile plays a crucial role in shaping communication strategies. It involves categorizing investors based on their understanding of cryptoassets, risk appetite, and investment objectives. By tailoring promotions to specific investor profiles, firms can ensure that their marketing efforts resonate effectively with the target audience while adhering to regulatory guidelines.

Understanding Investor Categorizations

Crypto exchanges in the UK must prompt investors to categorize themselves into one of three profiles based on their risk exposure, aligning with regulatory standards.

Profile Options:

  • Retail Investor: Haven’t invested more than 10% of net assets in high-risk ventures in the last 12 months, and have no intentions to do so in the upcoming 12 months.
  • High Net Worth Individual: Annual income exceeded £100,000 and/or possess net assets exceeding £250,000 in the last financial year.
  • Certified Sophisticated Investor: Received a certificate from an authorized firm within the last 3 years, affirming a comprehensive understanding of the risks associated with high-risk investments.

Automated Recategorization

Investors will be prompted automatically to reassess and update their categorization every 12 months. This ensures ongoing alignment with evolving financial situations and risk appetites while complying with regulatory standards.

Understanding Risks and Considerations in BABB App Cryptocurrency Investments

In the BABB app, users can engage in a range of services, including sending, receiving, and exchanging cryptocurrencies. However, it’s crucial to be aware of potential risks. One significant risk is the possibility of losing the entire investment within the app, as cryptocurrency values can experience rapid and significant fluctuations. The app provides transparency on these risks, emphasizing that cryptocurrency investments are subject to high volatility and rapid value changes. Additionally, users are advised to allocate a prudent portion of their net assets, with less than 10% recommended for mass market investments like cryptocurrencies.

It’s essential to understand that investments in the BABB app are not protected by the Financial Services Compensation Scheme (FSCS), and there’s a risk of losing part or all of the investment in the event of a hack or insolvency. The BABB app, like any digital platform, acknowledges vulnerability to cyberattacks. Moreover, selling cryptoassets within the app is not guaranteed at any time, depending on market conditions. Overall, users are encouraged to make informed decisions considering the inherent risks associated with cryptocurrency investments.

Conclusion

Incorporating these considerations into our marketing practices, BABB reaffirms its commitment to transparency, education, and responsible cryptoasset engagement. As we navigate this new regulatory landscape, our goal is to empower investors with the knowledge needed to make informed decisions in the dynamic world of cryptoassets. Stay tuned for more insights as we continue to demystify the evolving cryptoasset regulatory environment.

Read more about services offered by BABB on our Consumer Duty page.

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BABB

Babb aims to deliver accessible, secure, convenient and cost-effective mobile banking services designed to serve the global microeconomy — https://getbabb.com