The Financial Conduct Authority (FCA) announced today June 8 that from October 8 advertisers of crypto services in the UK will be subject to stricter regulations.
The UK watchdog has demanded that crypto companies in the UK set up a “cooling off period” for new investors. Additionally, as part of measures to increase investors’ risk awareness, the FCA has banned the use of ‘refer-a-friend’ bonuses by companies in the sector.
Sheldon Mills, executive director of consumer and competition, said in the written statement that while the decision to buy crypto rests with individuals, research indicates that many express regret when faced with impulsive choices. The rules implemented aim to give people sufficient time and appropriate risk warnings to enable an informed decision-making process.
In the statement, Mills added:
“The crypto industry must prepare now for this significant change. We are working on additional guidance to help them meet our expectations.
Under the new regulations, crypto companies are required to verify that individuals have the necessary knowledge and experience to engage in crypto investments. Additionally, those involved in the promotion of cryptocurrencies should provide transparent risk warnings and ensure that their advertisements are fair, clear and free of any misleading information.
These FCA rules align with government legislation to subject crypto promotions to regulatory oversight.
In a context of intense regulatory repression in the United States, marked by the American Securities and Exchange Commission (SEC) sue Binance and Coinbase, the recent development underscores the ongoing scrutiny facing the crypto industry.
In August 2022, CAF implemented stricter regulations to combat misleading advertisements for high-risk investment products. However, these measures did not include cryptocurrencies, as the regulator was awaiting confirmation from the government to extend its oversight to crypto products.
In its recent announcement, the FCA said the measures taken to crack down on crypto ads align with restrictions put in place last year to promote high-risk investments. Additionally, the FCA is seeking comments on additional guidance outlining the obligations of crypto advertisers. Interested parties have until August 10 to provide feedback during the consultation process.