The UK Financial Conduct Authority (FCA) has introduced new rules for the digital asset or crypto asset industry.
The FCA describes the new rules as “tough,” incorporating a “cooling off period” for new investors – commencing on October 8, 2023. The marketing rules are part of a broader package aiming to ensure investors understand the risk of buying crypto.
The marketing ploy of referring a friend for a bonus will also be banned.
Clear warnings must be displayed regarding risk and promotions must be deemed “clear, fair, and not misleading.”
Sheldon Mills, Executive Director for Consumers and Competition at the FCA, issued the following statement on the rules:
“It is up to people to decide whether they buy crypto. But research shows many regret making a hasty decision. Our rules give people the time and the right risk warnings to make an informed choice. Consumers should still be aware that crypto remains largely unregulated and high risk. Those who invest should be prepared to lose all their money. The crypto industry needs to prepare now for this significant change. We are working on additional guidance to help them meet our expectations.” The new rules come into effect as research from the FCA shows that estimated crypto ownership has more than doubled from 2021 to 2022, with 10% of the 2,000 people surveyed stating that they own crypto.”
The crypto rules are said to be in alignment with existing financial services offering rules for high-risk investments.
The FCA is also conducting a consultation on additional guidance for crypto promotions. The consultation is open until August 10, 2023.
The updated advertising requirements follow UK government announcements regarding an intent to turn the UK into a global crypto hub.