Financial Conduct Authority introduces new rules for marketing cryptoassets
The measures aim to ensure that purchasers of crypto understand the risks
The Financial Conduct Authority (FCA) announced on 8 June the introduction of new rules for marketing cryptoassets to UK consumers, which includes a new cooling-off period for first time investors, the introduction of a personalised risk warning pop-up and a ban on ‘refer a friend’ bonuses. The stated aim of the FCA’s new rules is to ensure that the ‘that firms communicating and approving financial promotions for cryptoassets do so to a high standard.’
The new rules, detailed in the FCA’s new policy statement ‘PS23/6: Financial promotion rules for cryptoassets,’ place requirements on crypto firms to ensure that UK consumers have the appropriate knowledge and experience when investing in crypto, as well as ensuring that those promoting and marketing crypto make sure that all advertising includes details on the risks involved, and is clear and not misleading. The policy statement also summaries the feedback received during the consultation on financial promotion rules for high-risk investments including cryptoassets, which was held in January 2022.
Alongside the publication of the new policy statement, the FCA also published a guidance consultation to provide further clarification on the expectations on firms communicating cryptoasset financial promotions to ensure promotions are clear, fair and not misleading. The consultation is open for feedback until 10 August 2023 and the responses will inform the final guidance to be published in autumn 2023.
Commenting on the new rules, Sheldon Mills, Executive Director, Consumers and Competition, at the FCA, 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.”