In an announcement on June 8th, the Financial Conduct Authority (FCA) of the United Kingdom (UK) stated that stricter regulations would be imposed on advertisers of cryptocurrency services in the UK from October 8th.
The FCA has specified that crypto companies in the UK must implement a “cooling-off period” for new investors and is prohibiting the use of “refer a friend” bonuses by firms in the sector as part of measures to improve investor awareness of risks.
Sheldon Mills, the Executive Director of Consumers and Competition at the FCA, stated that while individuals ultimately decide whether to invest in crypto or not, research has shown that many express regret over impulsive decisions. The goal of the new regulations is to give individuals enough time and risk warnings to make informed choices.
Mills also added in the statement:
“The crypto industry needs to prepare for this significant change now. We are working on additional guidance to help them meet our expectations.”
Under the new regulations, crypto companies must verify that individuals have the necessary knowledge and experience to invest in crypto. Advertisements for cryptocurrencies must also be fair and clear with transparent risk warnings and free of any misleading information.
The FCA’s new rules are in line with government legislation aiming to regulate cryptocurrency promotions. The crypto industry continues to face ongoing scrutiny, especially in the United States, where the SEC has filed lawsuits against Binance and Coinbase.
In August 2022, the FCA implemented strict regulations to combat deceptive adverts for high-risk investment products. However, these measures did not include cryptocurrencies, as the regulator awaited government approval to extend oversight to crypto products. In its latest announcement, the FCA declared that the new rules align with the restrictions implemented last year for promoting high-risk investments. The FCA is currently gathering feedback on additional guidelines outlining obligations for crypto advertisers, with a deadline of August 10th for interested parties to provide their input during the consultation process.