UK to limit crypto advertising with ‘cooling-off’ periods and risk warnings

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[1/2] Representations of cryptocurrencies are seen in this illustration, August 10, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

New Crypto Marketing Rules Go Into Effect October 8-FCA “Refer a Friend” Bonuses Will Be RemovedCrypto to Show Clear Risk Warnings

LONDON, June 8 (Reuters) – British consumers who buy crypto-assets will be granted a 24-hour cooling-off period for the first time from October, under tougher marketing rules unveiled on Thursday by the financial regulator.

Crypto-assets, such as bitcoin, have little direct regulation globally, but regulators are taking a closer look at the fall of FTX last year, which left millions of investors with losses totaling billions of dollars, including some in Britain.

The Financial Conduct Authority (FCA) has said that “refer-a-friend” bonuses for crypto buyers will also be scrapped and that those promoting these assets should put in place clear risk warnings and ensure that advertisements were clear, fair and not misleading.

The new crypto rules, which are similar to those imposed by the FCA last year to tackle advertising for high-risk investments in mainstream finance, come as Britain plans to regulate crypto-assets under a new financial services law this year.

“It’s up to people whether they buy crypto. But research shows that many regret making a hasty decision,” said Sheldon Mills, executive director of the FCA’s consumer and competition division.

“Consumers should always be aware that crypto remains largely unregulated and high risk,” he said.

FCA research shows that estimated crypto ownership more than doubled between 2021 and 2022, with 10% of 2,000 respondents reporting owning cryptoassets.

Under the new rules, crypto businesses will have to carry warnings such as: “Do not invest unless you are prepared to lose all the money you invest. This is a high risk investment and you don’t expect to be protected if something goes wrong.”

Myron Jobson, senior personal finance analyst at Investment Platform Interactive Investor, welcomed the new rules, noting that crypto advertising has become a “wild west of questionable claims and misleading information.”

“The challenge for the regulator is to design a strong know-your-customer framework so that all players involved know what good looks like,” he said.

Reporting by Kirstin Ridley; Editing by Emelia Sithole-Matarise

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