2023-06-14 07:00:21
According to the new rules, companies dealing with cryptocurrencies need to make sure that people are well-informed and have enough experience to invest in crypto. Furthermore, crypto promotions need to include a series of risk warnings, and adverts are required to be clear, fair and not in any way misleading.
These rules were implemented in the context of a government legislation package that wants to bring crypto promotions into the regulator’s remit. FCA representatives agreed that deciding whether to invest in crypto or not is a personal choice. However, they pointed to research-driven data that shows many users regret making a hasty decision, particularly one that’s not backed up by proper research.
In essence, the new rules aim to give people the time and the right risk warnings to make an informed choice. FCA research shows that the estimated crypto ownership has more than doubled from 2021 to 2022. Specifically, 10% of the 2,000 people surveyed stated that they own crypto.
The new rules also include a ban on free non-fungible tokens (NFT) giveaways and airdrops. In guidance accompanying the rules, the regulator also targeted stablecoin issuers, revealing that firms should be able to demonstrate the legitimacy of claims of stability or links to a fiat currency.
In addition, the FCA put forward for public comment a new guidance segment that aims to ensure companies clearly understand the implications of this requirement for crypto asset promotions.
Other crypto-related measures taken by the FCA
In May 2023, the Financial Conduct Authority checked a series of sites in Exeter, Nottingham, and Sheffield that were suspected of hosting illegal crypto ATMs. The inspections were part of a joint operation with the South West Regional Organised Crime Unit, Yorkshire and Humber Regional Organised Crime Unit, and the Nottinghamshire Police Force.
The regulators revealed that besides disrupting unregistered crypto businesses, the joint efforts have helped raise awareness of illegally operated crypto ATMs in the UK among the public. Again, the FCA pointed out that cryptocurrencies are not regulated and currently pose a high risk for consumers.
Crypto ATMs allow people to buy or convert money into crypto assets, but there are no crypto ATM operators registered with the FCA, which means that they can’t operate legally. The FCA is working with the National Economic Crime Centre to plan and coordinate action with law enforcement partners in relation to operators of illegal crypto ATMs.