The rule.
COBS 4.12A.20R prohibits the offering of incentives in cryptoasset financial promotions communicated to UK retail clients.
“A firm must not offer to any retail client, in connection with a qualifying cryptoasset, an incentive to invest. This includes, but is not limited to:
(a) any monetary or non-monetary benefit conditional on investment;
(b) any refer-a-friend or new-joiner bonus;
(c) any matched deposit or matched trade promotion;
(d) any free cryptoasset offer conditional on signup, deposit or trading.”
This is the rule that most distinguishes the UK regime from fintech precedent. Refer-a-friend is a staple of UK fintech — Monzo, Revolut, Wise all run referral programs. The cryptoasset perimeter is different. The FCA’s view is that incentives push consumers into a high-risk product against their interest.
What it requires.
Three operational obligations.
No new-investor incentives. No “sign up and get $10 in BTC.” No “deposit $100, we’ll match $20.” No “complete your first trade, get a free token.”
No referral incentives. No “refer a friend, you both get $20.” This breaks one of the most-used growth mechanics in fintech and has to be excluded from UK funnels specifically.
No conditional benefits. No “tier upgrades” or “perks” conditional on investing. No reduced fees in return for higher deposits. The conditionality on investment is what triggers the ban.
Common violations.
“Get $10 in BTC when you complete KYC and make your first trade.”
Standard signup incentive. Direct violation of 4.12A.20R(a) and (d). The most common UK-facing growth-funnel finding.
“Refer a friend. You both get £15 when they make their first trade.”
Direct violation of 4.12A.20R(b). Often inherited from a fintech-track growth playbook without UK-specific suppression.
“Reach VIP tier with $50k monthly volume. Lower fees, exclusive support, early access to new listings.”
Conditional benefits tied to investment level. Likely violation depending on framing. Fee reductions for volume are sometimes defensible; non-monetary perks like “early access” or “exclusive support” are harder to defend.
“Deposit ETH this month, eligible for the [Token] airdrop.”
Airdrop conditional on deposit. The conditionality on investment activity is what makes it an incentive in the FCA’s sense.
How to comply.
Geo-gate every growth mechanic that involves a conditional benefit. UK IPs, UK KYC residents, UK accounts — exclude from incentive programs at the level of the campaign engine, not just at display time.
If you want a UK growth lever, use unconditional benefits: lower headline fees, better UX, educational content, faster support. Things that aren’t conditional on investing.
Affiliate and KOL contracts that pay per-signup or per-trade for UK consumers are within scope. Restructure UK affiliate compensation to per-visitor (CPC) rather than per-acquisition (CPA), or exclude UK from the affiliate program.
Every lifecycle email, push, or in-app message that contains an incentive needs UK suppression. Build the audience-segment infrastructure once; apply it everywhere.
Related rules.
-
Pillar one of the UK regime.
-
Pillar two.
-
Pillar three.