Tom Gerken, technology reporter, BBC News:
Crypto companies will be required to offer 24-hour “cooling-off periods” to customers, as part of sweeping changes to how digital assets can be marketed in the UK. This means that new investors will have to wait a full day before they can complete their transaction.
With an estimated one in ten UK adults now owning some form of crypto, The Financial Conduct Authority (FCA) is introducing the changes, after the government legislated to give it authority over how the digital assets are promoted. Companies that fail to comply could face up to two years’ imprisonment, a fine, or both.
The rules, which will 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. They will include a ban on “Refer a friend” adverts, while others must be “clear, fair and not misleading”.
There have been calls for greater 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.
The FCA will “take robust action” against those that break the rules, including taking their websites offline. Consumers and Competition Executive Director Sheldon Mills said its research showed “many regret making a hasty decision”.
CryptoUK Operations Director Su Carpenter said the trade body agreed with the principle of the cooling-off period but questioned the duration. She said: “We would welcome evidence-based findings on the rationale behind this proposal. 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.”
Despite the changes, consumers should still be aware that crypto remains largely unregulated and high risk, and those investing should be prepared to lose all their money.
