Crypto ads face stricter rules, referral bonus ban by UK FCA

The Financial Conduct Authority (FCA) of the United Kingdom declared in an announcement on June 8th that from October 8th, 2023, those advertising crypto services in the U.K. will be subject to stricter regulations.

The watchdog has ordered crypto businesses in the U.K. to introduce a “cooling-off period” for first-time investors. Moreover, to increase investors’ understanding of the dangers, the FCA has banned firms in the industry from offering “refer a friend” rewards.

Sheldon Mills, the executive director of consumers and competition at the FCA, stated in a written statement that, while the choice to buy crypto is up to individuals, research has revealed that many regret making impulsive decisions. The regulations are meant to provide people with adequate time and the necessary risk warnings to make an informed decision.

Mills further commented:

Under the new rules, crypto firms are required to make sure that people have the understanding and expertise to participate in crypto investments. Additionally, those advertising cryptocurrencies must be sure to give clear risk notifications and guarantee their ads are straightforward, accurate, and free of any deceptive information.

The regulations issued by the FCA are in keeping with governmental legislation that requires crypto promotions to be subject to regulatory control.

Against the backdrop of a stringent regulatory environment in the United States, exemplified by the U.S. Securities and Exchange Commission (SEC) taking legal action against Binance and Coinbase, this recent development highlights the ongoing examination experienced by the cryptocurrency sector.

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In August 2022, the FCA put in place more stringent regulations to tackle deceptive advertising related to high-risk investment products. Nevertheless, these steps did not encompass cryptocurrencies, as the regulator was waiting for government approval to extend its supervision to crypto products.

In its recent announcement, the FCA declared that the steps taken to address crypto advertisements are in line with the restrictions imposed last year concerning the promotion of high-risk investments. The FCA is also asking for feedback on additional regulations detailing the duties of crypto advertisers. Individuals who are interested have until August 10th to respond during the consultation period.

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