UK's Financial Conduct Authority (FCA) is planning to tighten the noose around crypto advertisements in the country. The financial watchdog is planning to protect UK citizens from indulging in high-risk investments including cryptocurrencies. In recent months, crypto-promoting advertisements have faced criticism in the UK, especially from officials sitting on legislative positions. Despite its volatile nature, the crypto sector is expanding rapidly with millions of people from around the world experimenting with cryptocurrencies. UK's financial watchdog believes that several crypto investors are misinformed that leads them to financial losses.
A recent survey by the FCA revealed that 69 percent of crypto investors believed the assets to be regulated by the agency. Following this revelation, the body has decided to bring in strict rules against the promotion of high-risk investments in the country. Most of these people are aged between 18–40, a report by London-based news portal City A.M. said.
“We are consulting on proposals to strengthen our financial promotion rules for high-risk investments, and for authorised firms which approve and communicate financial promotions,” the FCA said in an official post.
It proposes to strengthen risk warnings, ban inducements to investments, and introduce stronger appropriateness tests to assess a consumer's experience and knowledge levels.
The FCA has invited feedbacks on classification of high-risk investments, consumer journey into high-risk investments, strengthening the role of firms approving and communicating financial promotions, as well as applying financial promotion rules to qualifying crypto assets.
“We will consider all feedback and, depending on the responses, publish a Policy Statement and final Handbook rules in summer 2022. For requirements relating to crypto asset promotions, we propose that any changes apply from the date qualifying crypto assets are brought within the financial promotion regime,” the FCA added, while also revealing that it plans to give companies three months to comply with whatever rules it brings in later this year.
Earlier this month, UK's Treasury had confirmed its intention to legislate and bring certain crypto assets under the scope of financial promotion regulations. Top of Form
Meanwhile, the Advertising Standards Agency of the UK has flagged crypto assets under red alert priority and has so far banned digital asset promotions by Arsenal, Coinbase, and Papa John's pizza among other brands.
Earlier in January, the UK government also launched an independent group of lawmakers intending to regulate the maturing digital currencies market. The name of this newly formed body is the “Crypto and Digital Assets Group”.
The group will explore a range of topics including protecting consumers from fraud and scams, advertising, financial education and inclusion, the UK's role as a leader in financial services and innovation, environmental issues, and the future of digital payments.
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