UK watchdog bans crypto firms over new rules

Crypto firms must warn customers that they should not expect protection if their investment goes wrong and offer a cooling off period for first-time investors, under new rules imposed by the UK financial watchdog.

The Financial Conduct Authority said firms promoting crypto products or services would need to carry a clear risk warning in their adverts from 8 October.

The FCA said it would include telling customers they should not expect protection if something goes wrong and ought to be prepared to lose all the money you invest.

To offer a pause to new investors who want to invest in their products, companies that advertise crypto assets, including cryptocurrencies like bitcoin, will have to offer a pause. Bonuses for introducing friends into a crypto firm s products will also be banned.

Sheldon Mills, the chief executive of consumer and competition at the FCA, said consumers should realize that the crypto industry is mostly unregulated, with the lack of a safety net putting investors at risk of losing their money.

Many regret making a hasty decision, according to new research. Our rules provide people with the time and the right risk warnings to make an informed choice, he said.

Cryptocurrency is largely unregulated and high risk for consumers, and it's important for consumers to be aware. Investors should be prepared to lose all their money. The FSA said that the UK's Crypto ownership in the UK grew significantly between 2021 and 2022. According to the survey conducted by the FCA, 10% of thosesurveyed said they owned crypto assets.

The watchdog has also warned that cryptoasset fraud is on the rise, with reports of crypto scams in 2019 at 1,619 in 2019 to 6372 in 2021.

The FCA said some crypto promotions have already been censured by the Advertising Standards Authority, including an advert by Luno, a cryptocurrency exchange, that appeared on London Underground and London bus networks saying: If you re seeing Bitcoin on the Underground, it s time to buy. The ASA also ruled in 2021 that a Facebook advert for a fan token issued by Arsenal football club trivialised investing in crypto.

The FCA said the new rules brought crypto into line with a regime introduced last year for misleading advertisements related to high-risk investments.

Crypto firms in Britain are on the road to more regulation. In February, the Treasury published a Consultative document on bringing crypto regulation in line with traditional assets like stocks and bonds.