In a June 8 announcement, the UK's Financial Conduct Authority (FCA) said advertisers of encrypted services in the UK will be subject to stricter regulation from October 8, 2023.
The regulator has asked UK-based cryptocurrency firms to implement a "cooling-off period" for first-time investors. In addition, the FCA banned firms in the sector from using "refer a friend" bonuses as part of measures to increase investor risk awareness. Sheldon Mills, executive director of consumer and competition at the FCA, said in a written statement that while the decision to buy cryptocurrencies is up to the individual, research shows that many people regret impulsive choices. These rules are designed to give pe ople enough time and appropriate risk warnings to enable an informed decision-making process.
In the statement, Mills added: “The crypto industry needs to prepare now for this major change. We are developing additional guidance to help them meet our expectations.”
Under the new regulations, crypto firms are obliged to verify that individuals have the knowledge and experience required to engage in crypto investments. Additionally, those promoting cryptocurrencies must provide transparent risk warnings and ensure their advertisements are fair, clear ar, and free of any misleading information . The FCA's rules are in line with government legislation aimed at making crypto promotions regulated.
Against the backdrop of a US regulatory crackdown, marked by the US Securities and Exchange Commission's (SEC) lawsuits against Binance and Coinbase, recent developments underscore the ongoing scrutiny the crypto industry faces. In August 2022, the FCA implemented tougher reg calculations to tackle deceptive advertising of high-risk investment products. However, these measures do not include cryptocurrencies, as the regulator is awaiting confirmation from the government to expand its oversight to crypto products.
In its recent announcement, the FCA said the actions taken to address crypto advertising are in line with restrictions imposed last year to facilitate high-risk investments. The FCA is also seeking feedback on additional guidance outlining the obligations of cryptocurrency rency advertisers. Interested parties have until August 10 to provide input during the consultation process.
