UK Implements Stricter Rules for Crypto Investments
The UK’s financial regulator has announced tougher marketing regulations for cryptoassets. Starting in October, British consumers purchasing cryptocurrencies will have a mandatory 24-hour “cooling-off” period, allowing them to reconsider their investment decisions.
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These measures come in response to the collapse of FTX, which resulted in significant losses for investors, including those in the UK.
Under the new rules, crypto firms will be required to include explicit warnings about the high-risk nature of investments and the potential loss of all invested funds.
Additionally, “refer a friend” bonuses for crypto buyers will be eliminated, and clear risk warnings and fair advertisements will be mandatory.
These regulations mirror previous measures imposed by the Financial Conduct Authority (FCA) to address high-risk investment advertising in mainstream finance. The UK is also planning to regulate cryptoassets under a new financial services law this year.
While consumers retain the freedom to decide on crypto investments, research reveals many regret making impulsive decisions. The FCA emphasizes that crypto remains largely unregulated and carries significant risks.
FCA research shows a doubling in estimated crypto ownership from 2021 to 2022, with 10% of surveyed individuals claiming to own cryptoassets.
With the inclusion of warning messages such as “Don’t invest unless you’re prepared to lose all the money you invest,” the FCA aims to provide transparency and caution in the crypto market.
The introduction of these new rules is welcomed by industry experts, as crypto advertising has become a domain of misleading information and dubious claims. Establishing a robust customer knowledge framework will be crucial for effective implementation, ensuring all participants understand the standards and expectations.
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