The UK's Financial Services Authority(FCA) has recently imposed a new set of guidelines to govern the promotion of crypto products, set to take effect on October 8th, 2023.
According to an official press release published by the financial regulator on Thursday, the new rules mandate that crypto firms promoting their products or services must include clear risk warnings in their advertising campaigns.
The FCA also adds that firms must warn their customers that they should not expect any form of protection if anything goes wrong with their investment, as crypto assets are still considered a high-risk and unregulated investment.
As per the release, crypto businesses must ensure that their promotions are fair and not misleading. They should also introduce a 24-hour "cooling off" period for first-time investors.
As part of the measures put in place to ensure that customers understand the risks of investing in crypto assets, the FCA's proposed rules will ban customer incentives like "refer a friend" and "new joiner" bonuses.
The FCA reiterated its warning about the risks involved in crypto investing, adding that customers must be prepared to lose all their money at any time.
Regarding the new rules, Sheldon Mills, the executive director, Consumers and Competition at FCA said, "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… 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 are in line with the FCA's commitment to reduce and prevent serious harm to investors, set and test higher standards and promote competition and positive change.
The financial regulator has also opened a public consultation on additional guidance for crypto advertising. Those who wish to comment on the guidelines have until 10th August to do so.
UK Crypto Ownership Doubles Over The Past Year
The new rules on crypto advertising come amid a growing number of crypto users in the UK. The crypto market in the UK has experienced impressive growth over the past year, despite regulatory challenges.
According to a research survey commissioned by the FCA, the estimated crypto ownership in the UK more than doubled in 2022. The survey revealed that 10% of the 2,000 respondents admitted to owning crypto assets, more than double the number from the previous year.
The FCA acknowledged that this growing number of crypto owners in the country indicates interest in crypto assets despite repeated warnings from regulators.
Since about 25% of the respondents noted that they had become interested in crypto due to advertising campaigns, the FCA insists that it is vital for crypto firms to provide investors with the right risk warnings and give them time to make informed choices.
Last year the UK authorities introduced a policy to ban irresponsible crypto ads.
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