The Financial Conduct Authority (FCA) has announced plans to introduce tougher rules for marketing cryptoassets to UK consumers.

Firms that market crypto products to consumers will need to introduce a cooling-off period for first-time investors from 8 October, the regulator has confirmed today.

Research from the FCA has previously shown that estimated crypto ownership has more than doubled from 2021 to 2022, with 10% of 2,000 people surveyed stating that they own crypto.

The new advertising rules follow government legislation to bring crypto promotions into the FCA’s remit, and form part of a package of measures designed by the regulator to ensure those who buy crypto understand the risk, with “refer a friend” bonuses also to be banned.

Crypto firms will need to ensure consumers have the appropriate knowledge and experience to invest in crypto, while firms promoting crypto must also put in place clear risk warnings and ensure adverts are clear, fair and not misleading.

Executive director, consumers and competition, Sheldon Mills, 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.

“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 FCA also confirmed it is now consulting on additional guidance setting out expectations of firms advertising crypto to consumers and said that those from the financial services industry wishing to have their say will have until 10 August to respond.

Personal finance analyst at Bestinvest, Alice Haine, commented: “Crypto is a highly volatile asset class, with the wild swings seen over the past year confirming why investors need to be fully aware that the value of their holding can drop as sharply as it can rise with some considering crypto investing akin to strolling into your local betting shop.

“A cooling-off period and clearer warnings of the high risk involved will give those that plough cash into cryptocurrencies valuable time to re-evaluate their decision – a key move that will help to protect new investors, particularly the young, from making a costly mistake.”

Head of money and markets at Hargreaves Lansdown, added: “It’s clear the FCA recognises the damage that can be done to overall investor confidence when such high-risk investments are bought by people who seem woefully unaware of the risks.

“However, it knows it’s also walking a tricky tightrope. It recognises these beefed-up safeguards are needed to ensure consumers are more protected from another FTX style implosion, but at the same time it doesn’t want to quash innovation in the digital coin and blockchain space.”

Share Story: