When the FCA’s financial promotions regime for cryptoassets came into force in October 2023, firms that were not themselves authorised or registered needed a route to communicate financial promotions legally. The section 21 approval route — under which an FCA-authorised person approves a promotion on behalf of an unauthorised firm — provided that route.
Many firms took it. They found an authorised firm willing to approve their promotions, obtained sign-off, and treated the process as a compliance formality. The promotion was approved; the firm could proceed.
That approach became significantly more difficult in 2024. The FCA introduced a financial promotions approval gateway — a new requirement that authorised firms wishing to approve promotions for companies outside their group must hold a specific FCA permission to do so. The effect has been material: fewer firms now hold that permission, the scrutiny applied to what gets approved has increased, and the process is no longer the formality many firms assumed it to be.
With the September 2026 authorisation window now open, firms that have been relying on the section 21 route — or planning to continue doing so — need to understand what the gateway means for them in practice.
What the Financial Promotions Approval Gateway Requires
The gateway came into effect in February 2024. From that date, an authorised firm that approves financial promotions for a company outside its own corporate group must have applied for and received a specific FCA permission to do so. Firms that were already approving third-party promotions had a transitional period to apply; those that did not apply, or whose applications were refused, ceased to be able to approve third-party promotions.
The FCA’s rationale was straightforward: the section 21 approval route was being used as a mechanism for bringing non-compliant promotions into the market under the cover of an authorised firm’s approval. By requiring approvers to hold a specific permission — and to demonstrate to the FCA that they have adequate systems for assessing promotions before approving them — the FCA sought to make the approval itself meaningful rather than administrative.
The result is a smaller pool of firms that can approve crypto financial promotions, a more demanding assessment process when they do, and a clearer line of accountability when something approved turns out to be non-compliant.
The Reduced Pool of Approvers
The number of authorised firms willing and able to approve crypto financial promotions has reduced significantly since the gateway came into effect. Some firms that were previously approving promotions did not apply for the new permission. Others applied and were refused, or chose not to continue offering the service given the increased scrutiny and liability exposure.
For crypto firms relying on the section 21 route, this means:
Finding an approver is harder. The market of firms offering approval services for crypto promotions is smaller than it was before the gateway. Firms that had an existing approver relationship should verify that the approver still holds the relevant permission. Firms that are looking for an approver for the first time will find fewer options.
The approval process takes longer. Approvers that hold the gateway permission are subject to greater scrutiny from the FCA on what they approve. They are, in turn, applying greater scrutiny to the promotions they are asked to approve. The turnaround time for approval has increased and the information approvers require before they will sign off a promotion has become more detailed.
The cost has increased. Fewer approvers and greater scrutiny mean that the commercial terms for approval services have shifted. Firms that budgeted for section 21 approvals based on pre-gateway pricing should review their assumptions.
What an Approval Actually Means — and What It Does Not
A section 21 approval is the approver’s assessment that the promotion meets the FCA’s requirements. It is not a guarantee of compliance. If the promotion turns out to be non-compliant — because it was inaccurately described to the approver, because the firm’s circumstances changed after approval, or because the approver’s assessment was wrong — the firm that communicated the promotion may still be in breach.
This matters for how firms treat the approval process. A firm that provides accurate, complete information to its approver, follows the approved content precisely, and updates the approver when relevant circumstances change is in a materially stronger position than a firm that treats approval as a licence to communicate whatever it wishes.
Specifically:
The approval covers the specific content approved. A promotion that differs materially from what the approver reviewed — different risk warning wording, different product description, additional incentive language — is not covered by the approval. Changes to approved content require re-approval.
The approval does not cover the communication route. An approved promotion that is communicated in a way the approver did not contemplate — for example, in a format that does not display the risk warning prominently, or through an affiliate channel that has not been reviewed — is not protected by the approval.
The approval does not transfer liability for the firm’s broader compliance. A firm whose promotions are section 21 approved but whose cooling-off period is not implemented, or whose affiliate channels are not monitored, remains in breach of the financial promotions regime in those respects regardless of the approval.
Worth asking:
When did your firm last verify that your section 21 approver still holds the gateway permission introduced in 2024? And when was the last time your approved promotional content was reviewed against the current FCA requirements — not just against what was approved at the time?
The Interaction with Authorisation
The section 21 approval route is, for most crypto firms, a transitional mechanism — a way of communicating financial promotions legally while the firm is not itself authorised or registered. With the FCA’s authorisation window now open, the question of how section 21 approval interacts with authorisation is a live one.
A firm that is authorised by the FCA can communicate its own financial promotions without needing a section 21 approver — provided those promotions comply with the regime. Authorisation removes the dependency on the approver route for the firm’s own promotional activity.
However, authorisation does not resolve the section 21 question for firms that promote through affiliates or partners who are not themselves authorised. An affiliate that is communicating financial promotions for an FCA-authorised firm’s products still requires a lawful communication route — which means either the affiliate itself holds the relevant registration, or the promotion is approved by an authorised person. The section 21 gateway question does not disappear at authorisation; it shifts to the affiliate and partner channel.
For firms that have not yet submitted an authorisation application, the section 21 route remains the mechanism for communicating promotions legally in the interim. Those firms should ensure that their approver relationship is current, that the approver holds the gateway permission, and that all promotional content in use has been approved under the post-gateway standard — not simply carried over from pre-gateway approvals.
What Firms Should Be Doing Now
Verify approver permission status. Check that your section 21 approver holds the FCA permission to approve third-party financial promotions under the gateway. The FCA’s register will confirm whether the firm holds this permission.
Audit approved promotional content. Review all promotional content currently in use against what was actually approved — including format variations, channel adaptations, and any content used by affiliates or partners. Content that has not been formally approved under the post-gateway standard should be treated as unapproved.
Review the approval process itself. The information and documentation your approver now requires before granting approval may be more detailed than what was required before the gateway. Ensure your internal process for preparing approval submissions reflects the current standard.
Plan for authorisation. If your firm is proceeding with an FCA authorisation application, the section 21 route is a transitional mechanism. As part of authorisation planning, consider how your financial promotions framework will operate post-authorisation — including how the affiliate and partner channel section 21 question will be managed.
Final Thought
The section 21 approval gateway was introduced because the FCA found that approvals were being used as a formality rather than a genuine compliance mechanism. The gateway has made approvals more demanding and the pool of approvers smaller — but it has also made approvals more meaningful. A promotion that has been through the post-gateway approval process carries more genuine compliance weight than one that was approved under the pre-gateway standard.
For firms still relying on the section 21 route, the question is not whether to use it — in the absence of authorisation, it remains the lawful route for most firms — but whether their use of it is current, compliant, and genuinely covering the promotional activity they are conducting.
If you want to understand where your financial promotions approval framework stands, speak to our team.
Book a free consultation
We help crypto firms assess their financial promotions compliance — including section 21 approval arrangements and authorisation readiness.
Email: info@lhiconsult.com | Phone: +44 203 319 5147 | Web: lhiconsult.com
This article is for general information purposes only and does not constitute legal or regulatory advice. LHI Consulting is a trading style of LHI Holdings Ltd, registered in England and Wales, No. 11496647.
FAQs
What is the financial promotions approval gateway and when did it come into effect?
The gateway is an FCA requirement, effective from February 2024, that authorised firms wishing to approve financial promotions for companies outside their corporate group must hold a specific FCA permission to do so. Before the gateway, any authorised firm could approve third-party promotions. The gateway reduced the pool of eligible approvers and increased the scrutiny applied to the approval process.
How do I check whether my section 21 approver still holds the gateway permission?
The FCA’s Financial Services Register records which firms hold which permissions. Search for your approver on the register and check whether their permissions include the financial promotions approval permission introduced by the gateway. If it does not appear, they are no longer able to approve third-party promotions.
We had our promotions approved before the gateway came in. Are those approvals still valid?
An approval obtained before the gateway is not automatically invalidated, but it should be reviewed. If the content has not changed and the approver still holds the gateway permission, the existing approval may still cover the promotion. If the approver no longer holds the permission, or if the content has been adapted or used in formats not covered by the original approval, the position needs to be assessed on its specific facts.
Does getting FCA authorisation mean we no longer need section 21 approvals?
For your own promotional activity, yes — an authorised firm can communicate its own financial promotions without a section 21 approver. However, if you promote through affiliates or partners who are not themselves authorised or registered, those promotions still require a lawful communication route, which may include a section 21 approval for that specific channel.
Our approver is telling us they can no longer approve our crypto promotions. What are our options?
You need to find an alternative approver that holds the gateway permission and is willing to approve crypto financial promotions — the market is smaller than before the gateway, but approvers still exist. Alternatively, if your FCA authorisation application is progressing, you should assess whether you can manage the interim period with a more limited promotional programme while the application is assessed. Operating without an approved communication route is not an option.