Reading 2 minutes Views 3 Published Updated
The Financial Conduct Authority (FCA) announced today, June 8th, that starting October 8th, advertisers of crypto-currency services in the United Kingdom will be subject to stricter regulations.
The British watchdog has ordered cryptocurrency companies in the UK to introduce a “cooling off period” for novice investors. In addition, as part of measures to raise investor risk awareness, the FCA banned the use of refer-a-friend bonuses by firms in the sector.
Sheldon Mills, chief executive of Consumers and Competition, said in a written statement that while the decision to buy cryptocurrency is made by individuals, research shows that many deplore impulsive choices. The rules put in place aim to give people enough time and appropriate risk warnings to enable informed decision making.
In a statement, Mills added:
“The cryptocurrency industry needs to prepare for this significant change now. We are working on additional guidance to help them meet our expectations.”
Under the new rules, crypto companies are required to verify that individuals have the necessary knowledge and experience to participate in crypto investments. In addition, those involved in the promotion of cryptocurrencies must provide transparent risk warnings and ensure that their advertising is honest, clear and does not contain any misleading information.
These FCA rules are in line with government legislation to ensure that cryptocurrency promotions are subject to regulatory oversight.
Amid intense regulatory action in the United States, marked by US Securities and Exchange Commission (SEC) lawsuits against Binance and Coinbase, recent developments highlight the ongoing scrutiny the cryptocurrency industry faces.
RELATED: AI could threaten humanity in 2 years, adviser to UK AI task force warns
In August 2022, the FCA introduced stricter rules to combat misleading advertising for high-risk investment products. However, these measures did not extend to cryptocurrencies as the regulator was awaiting government confirmation to extend its oversight to crypto products.
In a recent statement, the FCA said the actions taken to crack down on cryptocurrency ads are in line with restrictions put in place last year to promote high-risk investments. In addition, the FCA is seeking feedback on additional guidelines defining obligations for cryptocurrency advertisers. Stakeholders have until August 10 to contribute to the consultation process.