By George Ward
To ensure consumer protection in crypto, the Financial Conduct Authority (FCA) has intensified its effort to checkmate digital asset advertising in the country. The move is part of the regulator’s drive to protect crypto investors against potential losses and the firms offering such investments.
FCA Imposes New Crypto Marketing Rules
The financial market oversight organization, responsible for supervising nearly 50,000 enterprises in the United Kingdom, announced a new policy on June 8. The agency introduced a distinctive set of regulations tailored exclusively for companies offering digital asset services to foster fair competition and maintain integrity within the financial markets.
Drawing inspiration from established strategies, the FCA has reproduced its existing rules targeted at high-risk investments within the traditional finance industry by releasing new advertising guidelines for the cryptocurrency industry. Based on this new development, the regulatory agency has now classified various cryptocurrencies, including Bitcoin, Dogecoin, Ethereum, Litecoin, and others, as restricted mass market investments.
The FCA explained that the move is aimed at safeguarding consumer interests. With the latest action, the FCA will require crypto platforms to include detailed risk warnings on their promotional products in the UK market.
Due to recent developments, crypto token holders will no longer have the privilege of receiving incentives for referring others to purchase digital currencies through a designated platform, as the “refer a friend” program is now officially prohibited. Furthermore, as part of their proactive measures, the financial regulatory body has introduced a novel concept of implementing a mandatory 24-hour “cool off” period for individuals moving into crypto investments for the first time.
This implies that newly registered customers must patiently wait a full day after successfully setting up a valid trading account before gaining permission to engage in digital assets transactions.
Crypto Firms Kick Against New Policy
The recent move by the FCA to regulate crypto marketing is not without its opposition, as several digital asset service providers have hit out at the regulator. CryptoUK, an association of crypto trading platforms, seeks additional justifications on why the regulator chose a 24-hour duration as the “cool off” period.
Commenting on the FCA’s move, Su Carpenter, the Operations Director at CryptoUK, stated the organization’s desire to receive a thorough explanation of the FCA’s findings that present compelling evidence supporting the 24-hour “resting” period. Moreover, Carpenter stressed the need to implement relevant regulations that facilitate consumer confidence in transacting and investing in crypto assets and acknowledge their diverse use cases beyond being an investment asset.
The executive director of the FCA Consumers and Competition Division, Sheldon Mills, explained the agency has its reasons for imposing the new guidelines, scheduled to go live in October. Mills further stated that it is up to individuals to decide whether to invest in digital assets.
The FCA official reiterated that based on research outcomes, many crypto investors regretted investing in digital assets. As a result, it is the regulator’s responsibility to ensure consumers are aware of the high risks involved in this largely unregulated market.
Observers noted that, unlike the United States, the UK is making positive strides to ensure comprehensive crypto regulations. The Rishi Sunak administration’s plans to turn the UK into a global crypto and blockchain hub might become a reality sooner than expected.