Cryptoassets have moved from the fringes of the UK regulatory conversation to the centre of it. The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (Cryptoassets) Order 2023 brought qualifying cryptoasset promotions inside the financial promotions regime, and the Financial Conduct Authority's PS23/6 set out the detailed marketing rules that followed. Money laundering supervision of cryptoasset businesses sits under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), which require cryptoasset exchange providers and custodian wallet providers to register with the FCA. Against that backdrop, UK professionals who advise on cryptoassets face a materially different professional indemnity (PI) risk picture from the one they carried three years ago.
The 2023 amendment order and PS23/6 together mean that communicating an invitation or inducement to engage in a qualifying cryptoasset activity is a controlled financial promotion. Firms that promote cryptoassets to UK consumers must either be FCA-authorised, have their promotion approved by an authorised person, or use a gateway route such as an MLR-registered cryptoasset firm operating under limited exemptions. Standalone regulated investment advice on unbacked cryptoassets is not yet a specified activity under FSMA in the way that advice on shares or collective investment schemes is, but the surrounding conduct rules (promotions, appropriateness assessments, risk warnings, cooling-off) apply and are actively supervised.
An FCA-authorised independent financial adviser (IFA) who moves from tokenised funds or exchange-traded products with underlying cryptoasset exposure into direct advice on unbacked tokens is stepping onto ground where the authorisation footprint may not extend. Advising on units in a UCITS that holds regulated instruments is one thing; advising a client to allocate a proportion of their portfolio to a specific token is another. Where the activity falls outside existing permissions, the IFA may need a variation of permission, and any promotional material sits within PS23/6. Related pillar reading: IFA PI insurance.
Solicitors encounter cryptoassets in conveyancing source-of-funds enquiries, in matrimonial disclosure, in probate (where a deceased client's estate contains tokens or wallets), and in transactional work where consideration is paid in cryptoassets. Each touchpoint carries its own exposure: mistaken advice on tax treatment, failure to preserve wallet access on death, incorrect identification of the beneficial owner of an on-chain asset, or acting on instructions from a party whose funds cannot be traced under MLR 2017. Related pillar reading: solicitors' PI insurance.
HMRC treats cryptoassets as chargeable assets for capital gains purposes in most retail contexts and as trading income where the pattern of activity crosses the trader threshold. Accountants advising on disposals, staking rewards, yield-generating activity or DeFi lending may face allegations that a particular treatment was incorrect, that a disposal was missed, or that appropriate records were not maintained. Related pillar reading: accountants' PI insurance.
Insurers reacted to cryptoasset volatility and to the FCA's tightening perimeter by narrowing cover. It is now common to see PI wordings that carve out claims arising from advice on cryptoassets, from custody of cryptoassets, or from any activity requiring MLR 2017 registration that the firm has not obtained. Some markets sub-limit cryptoasset-related claims; others exclude the activity entirely unless the insured has declared and paid additional premium. A minority extend cover on a full-limit basis where the firm can evidence robust suitability processes and appropriate FCA permissions. Related pillar reading: management consultants' PI and IT consultants' PI.
Worked example — for illustration only. In 2024, an FCA-authorised IFA advised a client to allocate around 8% of an investment portfolio to a basket of unbacked cryptoassets. Following a market correction, the client's cryptoasset holding fell in value by approximately £120,000. The client alleged that the advice was unsuitable and that the risks had been inadequately explained. The IFA's PI cover responds where the activity sits within the policy's scope, but the wording contained a cryptoasset-related exclusion that had not been expressly extended at the last renewal. The broker's role at that renewal was to identify the exposure, present a market that would extend cover for a declared cryptoasset advice activity at additional premium, or make clear in writing that if the extension were declined the advice would be uninsured. The outcome turns on wording, disclosure at proposal, and the audit trail behind the suitability assessment.
Cryptoasset activity should be declared at proposal in specific rather than general terms — types of asset, volume of advice, whether the firm holds any custody, whether promotions are approved in-house — because a proposal that reads "general investment advice" invites an insurer to argue non-disclosure later. Where the incumbent market will not extend cover, specialist facilities exist, though at meaningful premium and often with an increased excess. In some cases the correct answer is to advise the professional that cryptoasset advice is not currently insurable within their PI programme and to help them consider whether to withdraw from the activity, ring-fence it in a separately insured entity, or accept it as an uninsured exposure with appropriate client disclosure.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.