UK FCA introduces new rules for crypto advertising
New advertising rules announced by the UK Financial Conduct Authority (FCA) will require those marketing cryptoassets to UK consumers to introduce a cooling-off period for first time investors from 8 October 2023.
As part of a package of measures designed to ensure those who buy crypto understand the risk, ‘refer a friend’ bonuses will also be banned.
The new rules mean crypto firms must ensure that people have the appropriate knowledge and experience to invest in crypto. Those promoting crypto must also put in place clear risk warnings and ensure adverts are clear, fair and not misleading.
Under the new rules, firms promoting crypto products or services will need to include a clear risk warning such as: ‘Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more.’
The FCA’s rules follow government legislation to bring crypto promotions into the regulator’s remit.
The new rules come into effect as research from the FCA shows that the estimated crypto ownership has more than doubled from 2021 to 2022, with 10% of the 2,000 people surveyed stating that they own crypto.
The approach taken to the promotion of crypto is consistent with the rules introduced by the FCA last year to tackle misleading financial advertisements of high-risk investments. It also supports the FCA’s three core commitments laid out in the 2023/24 business plan to reduce and prevent serious harm, set and test higher standards and promote competition and positive change.
The FCA is also consulting on additional guidance setting out expectations of firms advertising crypto to UK consumers. Those wishing to have their say will have until 10 August to respond.
Prior to the FCA’s remit including financial promotions for crypto products and services, the ASA had banned several crypto firms’ promotions for being misleading and irresponsible. For example, Luno’s out of home billboards told people it’s time to buy Bitcoin without a clear risk warning. Meanwhile, Arsenal Football Club’s promotion of its fan token with partner Socios on its website and Facebook was deemed by the ASA to have trivialised investing in crypto. The FCA will continue to work with the ASA.