FCA announces new advertising rules for crypto assets

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The UK’s Financial Conduct Authority has revealed new advertising rules for crypto assets to ensure users understand the risks associated with crypto.

According to the new rules, companies dealing with cryptocurrencies must ensure that people are well informed and have enough experience to invest in crypto. Additionally, crypto promotions must include a series of risk warnings, and advertisements must be clear, fair, and in no way misleading.

These rules have been implemented as part of a government legislative package that wants to bring crypto promotions into the remit of the regulator. FCA representatives agreed that deciding whether or not to invest in crypto is a personal choice. However, they pointed to research-based data that shows many users regret making a hasty decision, especially one that isn’t backed up by proper research.

Essentially, the new rules are about giving people the time and the right risk warnings to make an informed choice. FCA research shows that estimated crypto ownership more than doubled between 2021 and 2022. Specifically, 10% of the 2,000 respondents said they owned crypto.

The new rules also include a ban on giveaways and free non-fungible token (NFT) airdrops. In guidance accompanying the rules, the regulator also targeted stablecoin issuers, revealing that companies should be able to demonstrate the legitimacy of stability claims or ties to fiat currency.

In addition, the FCA has submitted a new guidance segment for public comment that aims to ensure that companies clearly understand the implications of this requirement for crypto asset promotions.

Other Crypto-Related Actions Taken by the FCA

In May 2023, the Financial Conduct Authority checked a series of sites in Exeter, Nottingham and Sheffield which were suspected of hosting illegal crypto ATMs. The inspections were part of a joint operation with the South West Regional Organized Crime Unit, the Yorkshire and Humber Regional Organized Crime Unit and Nottinghamshire Police.

Regulators revealed that in addition to disrupting unregistered crypto businesses, the joint efforts helped raise awareness of illegally operated crypto ATMs in the UK. Again, the FCA pointed out that cryptocurrencies are unregulated and currently pose a high risk to consumers.

Crypto ATMs allow people to buy or convert money into crypto assets, but there are no FCA-registered crypto ATM operators, which means they cannot operate legally. The FCA works with the National Economic Crime Center to plan and coordinate actions with law enforcement partners regarding illegal crypto ATM operators.

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