Promotions Communication Policy

AI Crypto Market's Company policy provides guidelines and sets expectations for the communication and approval of financial promotions related to qualifying cryptoassets. This policy aligns with existing regulatory obligations and does not introduce new requirements for AI Crypto Market.

This policy outlines AI Crypto Market's approach to ensuring that financial promotions related to qualifying cryptoassets comply with regulatory standards, particularly those outlined by the CFTC under the Commodity Exchange Act (the "CEA"). It emphasizes the necessity for financial promotions to be fair, clear, and not misleading.

Individuals authorized to communicate or approve financial promotions must also consider their obligations under the Consumer Duty ('the Duty'). This policy highlights the steps that authorized persons may need to take to meet these obligations under the Duty, ensuring that all communications are transparent, accurate, and compliant with regulatory expectations.

This guidance is relevant to AI Crypto Market because:

• The company communicates or approves financial promotions relating to qualifying cryptoassets.
• The company is registered with the United States Treasury Department under the Money Laundering, Terrorist Financing, and Transfer of Fund Money Laundering Regulations 2017 (Information on the Payer) Regulations and relies on the exemption to communicate financial promotions relating to qualifying crypto assets.

This Company Policy is also relevant to individuals and unauthorized persons who are seeking to understand or comply with our rules or are considering communicating cryptoasset financial promotions to US consumers.

A financial promotion is an invitation or inducement to engage in investment activity. It can take many forms, including advertisements placed in print, broadcast, or online media, marketing brochures, emails, websites, apps, or social media posts.

Our Perimeter Guidance Manual provides detailed guidance on the scope of the financial promotion regulations applicable in the United States.

Exemption for MLR-registered cryptoasset businesses

The definition of 'qualifying cryptoassets' under U.S. regulations broadly refers to any cryptographically secured digital representation of value or contractual rights that are transferable and fungible. This definition excludes cryptoassets that meet the definition of electronic money or an existing regulated investment.

This broad definition can encompass various types of cryptoassets, such as fiat-backed stablecoins. As a result, the financial promotion regulations apply to a wide range of promotions involving cryptoassets, related services, and arrangements.

Beyond the financial promotion restriction, AI Crypto Market also considers whether any of its activities involving cryptoassets are regulated and whether they have the necessary authorization and appropriate permissions to conduct their business in the United States.

Authorized companies must not approve cryptoasset financial promotions unless they have the appropriate competence and expertise to do so. Authorized companies intending to approve cryptoasset financial promotions should also consult the relevant government guidance on approving financial promotions. AI Crypto Market has specialized personnel dedicated to this specific domain.

Effective February 7, 2024, authorized companies approving the financial promotions of unauthorized companies can only do so within the scope of:

• a specific permission granted by the relevant regulatory authority; or
• a relevant exemption.

Authorized companies considering approving cryptoasset financial promotions for unauthorized companies need to determine whether they require permission from the relevant regulatory authority to do so.

AI Crypto Market ensures that any promotion they approve complies with the relevant financial promotion regulations and applicable consumer protection laws. They must act to deliver positive outcomes for the retail consumers who will see the promotion.

The U.S. Securities and Exchange Commission (SEC) rules for financial promotions related to cryptoassets apply to entities like AI Crypto Market that communicate or endorse such promotions. These rules also apply to entities that rely on specific exemptions while promoting cryptoassets.

Communications with Clients

The U.S. Securities and Exchange Commission (SEC) rules for financial promotions related to cryptoassets apply to:

• Authorized Persons/Companies (e.g., AI Crypto Market): These are entities that communicate financial promotions or approve such promotions for communication to professional clients. They must ensure that their promotions are accurate, truthful, and not misleading, with clear risk disclosures prominently displayed.
• MLR-Registered Persons: These are entities registered under Money Laundering Regulations that promote cryptoassets. Even if they rely on specific exemptions, they must still ensure compliance with SEC rules, providing balanced information on risks and benefits and avoiding incentives that could lead to impulsive investment decisions.

Key Principles

Under the U.S. Securities and Exchange Commission (SEC) rules, the following principles apply:

• Fair, Clear, and Not Misleading Communication: Financial promotions must be fair, clear, and not misleading. They should present information in a manner that is straightforward and easily comprehensible for retail customers.
• Risk Disclosures: Promotions must include clear and prominent risk disclosures to ensure retail customers are well-informed about potential risks.
• Prominence of Important Information: Essential information, including risk warnings, must be prominently displayed.
• No Unjustified Incentives: Financial promotions should not offer incentives that might encourage impulsive or reckless investment decisions.
• Compliance and Approval: Entities must ensure promotions comply with SEC regulations and obtain necessary approvals.

The relatively recent emergence of cryptoassets as an asset class means these investments often pose unique risks that may not be widely understood by prospective retail investors. AI Crypto Market provides all possible information to interested individuals and ensures that they are not misguided or misled in any direction.

Given the lack of transparency about the purpose and functionality of some cryptoassets and cryptoasset-related models, AI Crypto Market conducts significant due diligence on the cryptoassets it promotes. AI Crypto Market takes particular care with the information it provides and the way it is communicated to ensure that financial promotions are fair, clear, and not misleading.

Assessment Factors

When assessing whether a financial promotion is fair, clear, and not misleading, AI Crypto Market considers:

• Clarity and Comprehension: All promotional materials are presented in a manner that is easy for consumers to understand, avoiding unnecessary jargon or complex language.
• Consumers' Understanding of Risks: Promotions enable consumers to form an informed view of the risks of investing in cryptoassets.
• Balanced View of Information: AI Crypto Market presents a balanced view of the potential risks and rewards associated with cryptoassets.
• Accuracy of Claims: The company avoids making exaggerated claims about the potential benefits of cryptoassets.
• Complete Information: AI Crypto Market does not omit information that would impact consumers' ability to make an informed decision.
• Disclosure of Costs: Financial promotions clearly outline any costs, fees, and charges in a straightforward and transparent manner.

AI Crypto Market reminds individual consumers that communicating or approving cryptoasset financial promotions that the Duty applies to them and came into force on 31 July 2023. Where applicable, the Duty will build upon the core requirement for communications to be fair, clear, and not misleading.

The Duty sets high standards across retail financial services markets. In particular, the Duty consists of:

• a new Consumer Principle (Principle 12) for AI Crypto Market to act to deliver good outcomes for retail customers
• cross-cutting rules
• a suite of rules under 4 outcomes for products and services, price and value, consumer understanding, and consumer support

The cross-cutting rules include obligations to act in good faith towards retail customers, to avoid causing them foreseeable harm and to enable and support them to pursue their financial objectives.

AI Crypto Market takes into account customers' interests when presenting information while acting in good faith and avoiding foreseeable harm. The company does not exploit or manipulate retail customers' behavioral biases and/or information asymmetries to mislead or create demand for a product.

For the purposes of this Guidance, a financial promotion for a complex yield cryptoasset model or arrangement is a financial promotion where a person (Person A) markets the possibility for another person (Person B) to transfer or make available their cryptoassets to Person A to use. In return, Person B will receive a rate of return.

The activities underlying the financial promotions of complex yield models or arrangements for which consumers will receive a return may take a variety of forms. As a result, there will be differences in the complexity of such models and associated risks for consumers.

Required Disclosures

A financial promotion of a complex yield model or arrangement would be unlikely to be considered as fair, clear, and not misleading, unless it set out with sufficient clarity and prominence the following:

• Clear Evidence of Returns: Evidence of achieving the advertised rates of return is made available to potential consumers before an investment is made.
• Ownership Disclosure: Clear and prominent disclosure of the legal and beneficial ownership of a consumer's cryptoassets before they enter into an arrangement and the consequences if something goes wrong.
• Fee Transparency: Clear and prominent disclosure of any fees, fixed and or variable rates, commissions, or other charges within the investment's structure.
• Risk Awareness: The consumer is aware of the business model and all relevant risks associated with the complex yield cryptoasset model or arrangement.

Compliance with Government Guidance

• Government Guidelines: AI Crypto Market ensures that all financial promotions comply with the Government's existing guidance on financial promotions on social media.
• Equality and Diversity: The company adheres to equality and diversity considerations, ensuring promotions are accessible and consider the intended recipients.
• Technology-Neutral Rules: The financial promotion regime and government rules apply regardless of the format or type of communication on social media platforms.
• Commercial Relationships: Financial promotions on social media must disclose any relevant commercial relationships, such as being paid or commissioned to promote a cryptoasset or cryptoasset service.

Ongoing Review and Policy Updates

AI Crypto Market continually reviews its guidance and updates it based on market or regulatory developments, including broader guidance on financial promotions on social media. The company will consider any changes needed following consultation and regulatory updates.

To comply with existing requirements of the financial promotion regime, AI Crypto Market conducts thorough due diligence on both the cryptoasset or cryptoasset service it promotes, as well as any claims made in the promotion.

Key Due Diligence Areas

• Disclosure of Risks: Understanding relevant risks associated with the cryptoasset or cryptoasset service to ensure accurate and clear disclosure.
• Accuracy and Fairness of Claims: Verification of any claims made in the promotion to ensure they are fair, clear, and not misleading.
• Supporting Good Consumer Outcomes: Additional due diligence to meet obligations under relevant duties, ensuring promotions support good consumer outcomes.

Specific Due Diligence Considerations

• Authenticity and Accuracy: Verifying the authenticity of the proposition and reviewing documentation to ensure accuracy.
• Fraud and Financial Crime Prevention: Ensuring the cryptoasset is not linked to fraudulent activity, scams, money laundering, or other financial crimes.
• Operational or Technological Risks: Evaluating technological and operational risks, such as blockchain vulnerabilities, hacks, or code exploits.
• ESG Risks: Verifying claims about potential environmental, social, or governance benefits.
• Legal and Compliance Checks: Ensuring the cryptoasset does not constitute a specified investment and confirming regulatory compliance.

AI Crypto Market ensures that any promotion they communicate or approve does not give an inaccurate impression of the regulated status either of the Company or the cryptoasset to which the promotion relates. In particular, MLR registered persons, which are not otherwise authorised by the Government, must not suggest or imply that they are authorized by the FCA or that their MLR status is equivalent to being authorised.

AI Crypto Market does not use its regulated status in a promotional way. For example, by using its regulated status to claim or imply a competitive advantage over other firms/companies. AI Crypto Market does not claim or imply that its regulated status is an endorsement of the services it provides.

For questions about our promotions communication policy, please contact our compliance team.