- The UK introduced stiffer rules for crypto marketing this week.
- The nation’s FCA prohibited free crypto and NFT giveaways for virtual asset promotion.
The UK’s Financial Conduct Authority announced tighter rules for cryptocurrency advertisement. The new rules will take effect on 8 October. The United Kingdom will no longer allow crypto airdrops and free non-fungible tokens (NFTs) to attract potential investors.
FCA’s Mathew Long revealed that using airdrops and free NFT giveaways leads to clients investing in the assets without proper research, translating to future problems. Mr. Long clarified that the regulator would not ban airdrops and non-fungible tokens but advertisements involving them.
FCA Asks Firms Promoting Crypto to Include Risk Warnings
The new rules by FCA categorize cryptocurrencies as ‘Restricted Mass Market Investment.’ The body will require companies advertising crypto services and products to include risk warnings. Also, the regulator indicated that it would prohibit affiliation bonuses (refer a friend) that incentivize people to invest in digital coins. Moreover, the updated rules will include a cooling-off time for newbie traders to prevent impulsive purchases.
FCA study shows cryptocurrency ownership has two-folded between 2021 and 2022. Of 2,000 surveyed individuals, 10% owned digital currencies. The regulator’s director of Consumer & Competition, Sheldon Mills, stated that most individuals regret hasty decisions whenever they buy cryptos.
Meanwhile, the updated rules will give individuals time and risk warnings for informed choices. Mills reminded us that digital assets remain highly risky and unregulated.
FCA Introduces Stiffer Laws Despite Industry Pushback
The FCA researched its proposed regulations in 2022. Meanwhile, most respondents disagreed with updates such as prohibiting incentives, treading cryptocurrencies as a ‘mass market investment,’ and blocking newbies from accessing promotional offers.
Only firms that the watchdog authorizes can advertise crypto services and products. Considering the lack of a stipulated framework for FCA to license cryptocurrency companies, the government has launched an impermanent exception to allow digital asset companies to adhere to AML policies to approve their promotions starting in October.
Meanwhile, that’s a temporary measure, and FCA will eventually permit licensed firms to approve adverts. However, some industry participants believe the requirements might be too restrictive. Nonetheless, the FCA will continue with its plans despite disagreements.
