‘Robust action’
The Financial Conduct Authority (FCA) is introducing sweeping changes to how crypto-assets can be marketed in the UK. Crypto companies must offer customers a 24-hour “cooling-off period” before they can complete their transaction. Consumers will have to wait a full day before they can complete their transaction, and bosses of companies that fail to comply could face up to two years’ imprisonment, a fine, or both.
The rules, set to take effect from 8 October, will apply to the broad spectrum of so-called crypto-assets such as non-fungible tokens (NFTs) and digital currencies such as Bitcoin. “Refer a friend” adverts will be banned, while others must be “clear, fair and not misleading”. The FCA will “take robust action” against those that break the rules, including taking their websites offline.
The government estimates up to one out of every 10 of UK adults now owns some form of crypto. There have been calls for more regulation in the area. Last month, a committee of MPs said the characteristics of cryptocurrency “more closely resemble gambling than a financial service”. And gambling-helpline charity GamCare told BBC News it had, in the previous two years, heard from more than 300 people struggling with investing in cryptocurrency and other forms of online financial markets.
‘High risk’
Consumers and competition executive director Sheldon Mills said its research showed “many regret making a hasty decision”. “It is up to people to decide whether they buy crypto,” he said. “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.”
‘Appropriate safeguards’
CryptoUK operations director Su Carpenter said the trade body agreed with “the principle” of the cooling-off period,but questioned the duration. “We would welcome evidence-based findings on the rationale behind this proposal,” she said. “We want to encourage a competitive and equal environment for the crypto-asset industry to continue to grow and innovate safely, whilst operating within appropriate safeguards and offering education and information to all consumers. We will be working with our members to respond to the consultation with recommendations to help ensure this outcome.”
