The United Kingdom has taken a significant step in regulating the cryptocurrency industry by implementing stricter marketing rules. In a bid to protect consumers and mitigate the risks associated with cryptocurrency investments, the UK bans refer a friend bonus in crypto marketing campaigns.
The decision comes as part of the government’s efforts to address concerns regarding the unregulated nature of the crypto market and the potential for fraudulent activities. By prohibiting the use of referral bonuses, the UK aims to discourage misleading and aggressive marketing tactics often employed by crypto companies to attract new investors
UK regulator tightens control on crypto advertisements: prioritizing clear risk disclosure to British buyers in marketing efforts
The Financial Conduct Authority (FCA) of the UK unveiled new regulations governing the advertising of crypto assets to the public. These stringent rules mandate that crypto firms must verify that British investors possess the necessary knowledge and experience to engage in crypto investments. Additionally, promoters are required to provide explicit warnings about the associated risks involved in crypto investments.
As part of the new measures, UK bans “refer a friend” bonus, which has been widely used as a marketing strategy in the crypto industry, has been implemented. Additionally, the FCA now mandates that companies advertising crypto assets to UK consumers must establish a cooling-off period specifically for first-time investors starting from October 8, 2023.
Introduction of Cooling-off Period: Increased Investor Protection in UK Crypto Advertising
According to Bloomberg, the Financial Conduct Authority (FCA) explained that the cooling-off period begins when a prospective investor expresses interest in crypto advertising materials and requests further information. The marketing entity promoting the investment is then required to wait for 24 hours before responding to the customer’s inquiry.
The Financial Conduct Authority (FCA) highlighted that the updated rules align with government legislation to bring crypto promotions under its regulatory oversight. The FCA emphasized that its approach to crypto promotion is in line with the regulations it implemented last year to combat misleading financial advertisements.
FCA Executive Director Warns of Crypto Risks: Investor Awareness and Preparedness Stressed
In the press release, Sheldon Mills, the Executive Director of Consumers and Competition at the FCA, emphasized the need for British individuals to understand that crypto assets are predominantly unregulated and carry inherent risks. He highlighted that investors should be fully aware that there is a possibility of losing all their invested funds. Mills stressed the importance of this awareness and reiterated:
“It is up to people to decide whether they buy crypto. But research shows many regrets about making a hasty decision. Our rules give people the time and the right risk warnings to make an informed choice. “
After conducting its own research, the FCA indicated that the newly implemented regulations would take effect. The research findings demonstrated a significant increase in crypto ownership in the U.K. in 2022, surpassing the previous year’s figures by more than double. The FCA also reported that out of the 2,000 individuals surveyed, 10% confirmed their ownership of cryptocurrencies.
In conclusion, the UK’s Financial Conduct Authority (FCA) has introduced stricter regulations for the advertising of crypto assets aimed at protecting consumers and increasing transparency in the market. UK bans refer to a friend bonus and implementing a cooling-off period; the FCA aims to mitigate risks associated with crypto investments and ensure investors have adequate knowledge and understanding.
The regulations come as crypto ownership in the UK has surged, with the FCA’s research showing a significant increase in ownership compared to the previous year. These measures demonstrate the government’s commitment to regulating the crypto industry and safeguarding investors in an evolving financial landscape.
Also Read: Crypto.com Halts US institutional division Due to Limited Demand.
