The U.K.'s Financial Conduct Authority (FCA), the country's financial regulator, has decided to tighten rules for crypto promotions as the global regulatory efforts around the crypto industry have intensified. Sheldon Mills, executive director of consumers and competition at the FCA, has reminded consumers that the crypto market is still unregulated and high-risk. As part of the new rules, crypto will be classified as restricted mass market investments, a category for high-risk investment products, as of Oct. 1. - Crypto ads will also have to contain clear risk warnings, including a notification that the investors should not expect protection if something goes wrong and should be prepared to lose all the money they invest.
- In addition, the amended rules prohibit incentives such as referrals and new joiner bonuses.
- The agency will also start implementing a 24-hour cooling-off period for investors who engage in crypto for the first time as of Oct. 8.
- The cooling-off period, already used for other investments classified as high-risk, will start when a potential investor responds to the marketing material by requesting additional information, and the entity marketing the investment will have to wait 24 hours before responding.
The FCA has seen crypto as a high-risk asset class for several years despite Prime Minister Rishi Sunak's push to make the country a global crypto hub since his finance ministry. - The U.K. lawmakers also recently argued that retail investing in unbacked cryptocurrencies, including Bitcoin (BTC) and Ether (ETH), should be legally regulated like gambling.
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