FCA action against HTX: Why this matters for every firm communicating to the UK

The Financial Conduct Authority has commenced High Court proceedings against HTX (formerly Huobi) for alleged breaches of the UK financial promotions regime under section 21 of the Financial Services and Markets Act 2000.

This is the first enforcement action of its kind since qualifying cryptoassets were brought within scope of the financial promotions regime in October 2023. While the case centres on a cryptoasset exchange, its implications extend well beyond crypto. Any firm communicating investment-related promotions that can reach UK consumers should be paying close attention.

What the FCA is alleging

The FCA alleges that HTX communicated financial promotions to UK consumers without being authorised, without having those promotions approved by an authorised firm, and without relying on a valid exemption.

According to the regulator, promotional materials were made available through HTX’s website and social media channels, including X and Instagram. These communications allegedly encouraged users to sign up, trade, and participate in reward schemes. The FCA states that it engaged with HTX before commencing proceedings, including warning the firm of regulatory changes in 2023, placing it on the FCA Warning List, and sending further correspondence in 2024 and 2025. Despite this, the regulator concluded that enforcement action was required.

Notably, proceedings have reportedly been brought not only against the corporate entity but also against categories of unidentified persons connected with ownership, control, and social media activity. This suggests a willingness by the FCA to pursue accountability even where offshore structures make attribution difficult.

The financial promotions restriction: a refresher

Section 21 of FSMA prohibits a person, in the course of business, from communicating an invitation or inducement to engage in investment activity unless that person is authorised by the FCA, the content is approved by an authorised person, or a specific exemption applies.

Since 8 October 2023, the regime has expressly covered qualifying cryptoassets following amendments to the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005.

A key point that firms often underestimate is how low the jurisdictional threshold is. For communications originating outside the UK, the test is whether the promotion is capable of having an effect in the UK. There is no requirement to demonstrate that the firm actively targeted UK consumers. Accessibility alone can be sufficient.

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Why a disclaimer is not enough

HTX reportedly stated that it had ceased targeting UK consumers. However, the FCA’s case appears to rely on operational indicators suggesting that UK users could still access and transact on the platform. These reportedly included the use of English language, the acceptance of sterling, the ability to verify accounts using UK-issued identification, and continued accessibility from UK IP addresses.

This highlights a critical compliance principle: intention must be supported by effective controls. Simply stating that a firm does not target the UK will not be persuasive if, in practice, UK consumers can easily access the platform and transact.

Where firms seek to rely on the overseas persons exemption, they need credible and demonstrable safeguards. That may include effective geo-blocking, restricting UK-issued identification documents, removing GBP functionality, and ensuring that UK consumers cannot complete transactions. The FCA’s message is clear—substance must align with stated policy.

The consequences of getting It wrong

Contravening section 21 of FSMA is a criminal offence. It carries the potential for imprisonment of up to two years and/or an unlimited fine. Where a corporate entity commits the offence, individual officers may also face liability if the breach occurred with their consent, connivance, or through neglect.

There are also serious civil consequences. Under section 30 of FSMA, an agreement entered into as a result of an unlawful financial promotion may be unenforceable against the customer. The customer may be entitled to recover money paid and claim compensation for losses. For firms with significant UK-facing activity, this can create substantial financial exposure beyond regulatory penalties.

This is not just a crypto story

Although the HTX proceedings concern a cryptoasset exchange, the underlying framework applies to a broad range of investment promotions. Securities, derivatives, collective investment schemes, structured products, and certain insurance-based investments all fall within scope under the Financial Promotion Order.

In practice, we see risk arising not only from formal advertising campaigns but also from website content, social media posts, email marketing, investor pitch materials, and communications distributed by affiliates or introducers. For authorised firms approving third-party promotions, the regulatory burden extends further through the detailed requirements in COBS 4.

The HTX case demonstrates that perimeter risk is not theoretical. The FCA is prepared to escalate matters to the High Court where it believes unauthorised promotions are accessible to UK consumers.

The broader regulatory direction

This enforcement action comes at a time when the UK’s approach to cryptoasset regulation is evolving rapidly. The FCA has indicated that it expects to begin accepting applications from September 2026 under a new, more comprehensive cryptoasset regulatory framework anticipated to take effect from October 2027. Overseas firms dealing with UK consumers are likely to require UK authorisation under that regime.

Taken together, these developments point in one direction: increased scrutiny of cross-border digital promotions and greater accountability for firms whose communications reach the UK.

What firms should be considering now

The practical takeaway is straightforward. Firms should assume that if their communications are visible to UK consumers, they are potentially within scope of section 21. That means reviewing website content, social media activity, approval arrangements, and any reliance on exemptions. Where overseas exemptions are relied upon, firms should stress-test whether their controls genuinely prevent UK consumers from engaging.

This is precisely the type of risk that technology-enabled monitoring can support. Finspector helps firms identify financial promotions exposure across digital channels, assess compliance against FCA standards, and generate auditable reporting for compliance teams. In an environment where the regulator is willing to pursue court action, proactive oversight is increasingly essential.

The FCA’s action against HTX is not just a crypto milestone. It is a clear reminder that the UK financial promotions regime has teeth, and that cross-border digital activity will not shield firms from enforcement if UK consumers can access their promotions.

FCA Article: https://www.fca.org.uk/news/press-releases/fca-action-against-htx-illegal-financial-promotions