The UK Financial Conduct Authority (FCA) is finalizing regulations around cryptocurrency marketing and advertising in the country, which are set to take effect from October 8. These proposed rules were reported as the number of crypto holders in the UK more than doubled in the past year.
New Crypto Ads Rules in the UK
According to the documents published today (Thursday), the new rules will classify cryptocurrencies as “restricted mass market investments” and require “clear risk warnings” on any crypto advertisements or promotions. It will also ban investment incentives that came in the form of “refer to a friend” or “new joiner bonuses” schemes.
Another significant requirement will be the cooling-off period for the new investors, which will prohibit consumers from sending a Direct Offer Financial Promotions (DOFP) without a reconfirmation request at least 24 hours later.
Further, crypto firms need “adequate due diligence and have sufficient evidence of the underlying crypto asset to ensure the financial promotion is fair, clear, and not misleading.”
Additionally, the regulations proposed up to two years of imprisonment in case of any violations of these rules.
“It is up to people to decide whether they buy crypto. But research shows many regret making a hasty decision,” said Sheldon Mills, the Executive Director of Consumers and Competition at the FCA. “Our rules give people the time and the right risk warnings to make an informed choice.”
Mass Interest Shaping Regulatory Decision
A survey of 2,000 respondents by the FCA shows that 40 percent of them purchased cryptocurrencies as a gamble, while around 30 percent regretted their decision to do crypto investments.
“The requirement that all approvers of financial promotions have an understanding of cryptoassets and have permission to act as an approver also has the potential to introduce an overly restrictive regime, based on the incredibly small number of organizations which would meet that criteria for approver status,” said Su Carpenter, the Director of Operations at CryptoUK, the trade body for the UK crypto industry.
“We have concerns that the policy proposed may bring into play disproportionately restrictive barriers and create an unbalanced environment.”
Earlier, the UK ads regulator pulled down the crypto advertisements of several well-known brokers and exchanges. It even flagged two crypto fan tokens ads by football club Arsenal as misleading.
Meanwhile, several other jurisdictions, including Belgium, South Africa, and Thailand, also brought regulations to control the rampant promotion of cryptocurrencies.
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This article was written by Arnab Shome at www.financemagnates.com.
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