UK’s lawmakers to tighten its stance on crypto promotion, ads need to carry risk warnings

The U.K.’s Financial Conduct Authority (FCA) has begun tightening its noose around cryptocurrencies. The financial regulator is set to put in place stringent rules for advertising on cryptocurrencies, as per the documents released on Thursday. It says that first-time British customers buying crypto assets will be given a 24-hour cooling-off period from 8 October.

Further, the UK’s financial watchdog mentioned that bonuses for introducing friends to a crypto firm’s products will also be banned. Also, those firms promoting such assets would need to carry a clear risk warning in their adverts and should also ensure that they are fair and not misleading.

Crypto remains largely unregulated and high risk: FCA

FCA’s policy statement on financial promotion rules for crypto assets mentions, "Even when the financial promotions regime comes into force, crypto assets will remain high risk and largely unregulated.” It further stated, “Consumers should only invest in crypto assets if they understand the risks involved and are prepared to lose all their money. Consumers should not expect protection from the Financial Service Compensation Scheme (FSCS) or Financial Ombudsman Service if something goes wrong."

In the words of Sheldon Mills, executive director at the FCA's consumers and competition division, "It is up to people to decide whether they buy crypto. But research shows many regret making a hasty decision."

FCA said that it wants consumers to receive timely, high-quality information which enables them to make informed and effective investment decisions related to cryptocurrencies and not be misled or pressured to invest in crypto assets.

It must be noted that the said new rules on marketing have been put forward because crypto ownership in the country has almost doubled from 2021 to 2022. Moreover, the financial watchdog aims to reduce and prevent any serious wrongdoings in this space.