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The FCA has announced that those who market crypto assets to UK consumers will need to introduce a ‘cooling-off’ period for first time investors from 8 October 2023, under new advertising rules.
This is part of a package of measures that are designed to ensure those who buy crypto understand the risk. As a result, the FCA will also ban ‘refer a friend’ bonus.
The new rules mean crypto firms must ensure that people have the appropriate knowledge and experience to invest in crypto, while those promoting crypto must also put in place clear risk warnings and ensure adverts are clear, fair and not misleading.
The FCA’s rules follow government legislation to bring crypto promotions into the regulator’s remit.
The rules are being put in 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.
Sheldon Mills, executive director of consumers and competition at FCA, said: “It is up to people to decide whether they buy crypto. But research shows many regret making a hasty decision. Our rules give people the time and the right risk warnings to make an informed choice.
“Consumers should still be aware that crypto remains largely unregulated and high risk. Those who invest should be prepared to lose all their money.”
He added: “The crypto industry needs to prepare now for this significant change. We are working on additional guidance to help them meet our expectations.”
