- The Financial Conduct Authority has introduced new rules on marketing high-risk investments. It says regulations for firms marketing cryptocurrency products will follow in the future.
- The U.K. regulator said that the crypto-specific rules will depend on the government’s decision on how to legislate cryptocurrency marketing.
- The U.K. government is currently going through a transition phase following Boris Johnson’s resignation from Number 10.
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“Crypto remains high risk so people need to be prepared to lose all their money if they choose to invest in cryptoassets,” a press release from the U.K. regulator said.
FCA to Regulate Crypto Marketing Campaigns
The U.K.’s financial regulator has set out new rules on marketing “high-risk investments”—with crypto regulations soon to follow.
The Financial Conduct Authority published a press release Monday, saying it had introduced stronger rules for companies marketing “high-risk investments.” Under the new regulations, firms are required to clarify any risks associated with investing in an instrument and are also banned from offering investment incentives like referral bonuses. The aim of the regulations, the FCA said, is to better protect consumers.
Though the rules don’t pertain to companies promoting crypto assets, the FCA has confirmed that it plans to introduce new crypto-specific regulations in the future. According to the press release, those rules will depend on how the U.K. government plans to legislate crypto marketing, and “are likely to follow the same approach as those for other high-risk investments.”
The FCA has previously indicated that it has a relatively negative stance toward crypto, issuing repeated warnings about the risks of investing in the space. Today’s statement once again cautioned investors about the risks of digital assets. “Crypto remains high risk so people need to be prepared to lose all their money if they choose to invest in cryptoassets,” the statement said.
“We want people to be able to invest with confidence, understand the risks involved, and get the investments that are right for them which reflect their appetite for risk,” said the FCA’s Executive Director of Markets Sarah Pritchard.
The U.K. Crypto Landscape
The FCA was given new powers to clamp down on crypto marketing by the government in January and has since introduced a ban on Bitcoin ATMs. The Advertising Standards Agency, too, has been keeping a close eye on how crypto-native firms promote their services in the U.K. In March, it published an enforcement notice urging companies to highlight the volatile nature of the market and refrain from taking advantage of inexperienced investors.
While the FCA has highlighted its intent to continue monitoring the crypto space, the U.K.’s crypto strategy is currently in a limbo phase thanks to the status of the government. After Boris Johnson stepped down as prime minister following a wave of scandals last month, former Chancellor Rishi Sunak and Liz Struss are fighting it out over who will lead the country under the Conservatives. Sunak showed his interest in crypto in April when he said he wants the U.K. to become “a global hub for cryptoasset technology,” and other Tory MPs like Matt Hancock have pushed for the U.K. to embrace the technology, but the most concrete development has been Her Majesty’s Treasury’s legislative framework for regulating stablecoins. Rather than crypto regulation, the recent debates between Sunak and Truss have focused mainly on taxes and soaring inflation rates. Johnson’s successor will be announced on September 5.
Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.