Great Britain’s financial watchdog has unveiled what it calls “tough rules” for crypto marketing.
The Financial Conduct Authority on Thursday (June 8) announced that companies marketing crypto assets to consumers in the U.K. will need to introduce a “cooling-off” period for new investors beginning Oct. 8.
As part of a package of measures designed to ensure those who buy crypto understand the risk, “refer a friend” bonuses will also be banned.
“It is up to people to decide whether they buy crypto. But research shows many regret making a hasty decision,” Sheldon Mills, the FCA’s executive director for consumers and competition, said in a news release.
He added that the rules give consumers time and proper warning to make informed decisions, and argued that crypto remains a high-risk investment.
“The crypto industry needs to prepare now for this significant change,” Mills added. “We are working on additional guidance to help them meet our expectations.”
The release points to FCA research which estimates that crypto ownership more than doubled between 2021 and 2022, with 10% of the 2,000 people surveyed saying they own crypto.
The authority’s announcement comes as the U.K. is working on legislation that would subject crypto companies to the same oversight as traditional finance firms.
“Our robust approach to regulation mitigates the most significant risks, while harnessing the advantages of crypto technologies,” the British treasury said when announcing its proposal earlier this year. “This enables a new and exciting sector to safely flourish and grow, boosting jobs and investment.”
As PYMNTS wrote, the treasury wants to mandate that crypto platforms need to define “the detailed content requirements for admission and disclosure documents” to make sure that crypto exchanges have “fair and robust standards.”
Meanwhile, Thursday also saw European consumer advocacy group BEUC file a complaint against Twitter, YouTube, TikTok and Instagram, saying these social networks allowed misleading ads for cryptocurrency on their platforms.
“These social media companies are responsible for allowing misleading advertisements of crypto assets (‘crypto’) to multiply on their platforms (both through advertising and influencers),” BEUC said in a news release. “This constitutes an unfair commercial practice, as it exposes consumers to serious harm i.e., the loss of significant amounts of money.”