In an announcement, the UK Financial Conduct Authority (FCA) said it plans to restrict crypto ads in response to concerns about the ease and speed of high-risk investments decisions. These restrictions would be in line with a Consumer Investment Strategy published last year. The FCA would require firms that approve and communicate financial marketing to have relevant expertise and understanding of the investments being offered. Risk warnings on ads have to be improved; incentives and bonuses for new investments and referrals will be banned.
Over the last few months, we have warned many times about the fraudulent online advertising campaigns around cryptocurrencies. For example, crypto ads are used by scammers to catch victims for broker scams. In August 2021, Google UK & Ireland has already enacted more restrictive measures for the placement of financial ads. Now the UK regulator is also taking action.
The FCA plans to categorize cryptoassets as Restricted Mass Market Investments, meaning consumers would only be able to respond to cryptoasset financial promotions if they are classed as restricted, high net worth, or sophisticated investors. Issuers of crypto ads and promotions would have to adhere to FCA rules, such as the requirement to be clear, fair, and not misleading,” it adds. Currently, the FCA regulator is consulting on the proposals with a deadline of March 23 for responses.
Too many people are being led to invest in products they don’t understand and which are too risky for them. People need clear, fair information and proper risk warnings if they are to invest with confidence, which is the central aim of our consumer investments strategy.
Sarah Pritchard, FCA executive director of markets
The UK government confirmed it would take the respective legislative measures to allow the FCA to regulate the promotion of cryptoassets. Crypto ads will be brought into line with other financial advertising, ensuring they are fair and transparent. The government announcement said that new rules would increase consumer protection while encouraging innovation.
This sounds like excellent news to us.
