The marketing of digital assets in the UK will undergo sweeping changes, as crypto companies will now have to offer customers a 24-hour ” cooling-off period. ” New investors will have to wait a full day before they can finalize their transactions.
The UK government estimates that approximately one in ten adults in the country currently owns some form of cryptocurrency. In order to ensure compliance, company executives who fail to adhere to the regulations could face imprisonment of up to two years, a fine, or both.
Furthermore, the enforcement of the ban on “refer a friend” advertisements will take place, while all other advertisements must adhere to the criteria of being “clear, fair, and not misleading.”
These rules, which will come into effect on 8 October, apply to a wide range of crypto-assets, including non-fungible tokens (NFTs) and popular digital currencies like Bitcoin.
There have been calls for more regulation in the area. Last month, a committee of MPs said the characteristics of cryptocurrency “more closely resemble gambling than a financial service”. And gambling-helpline charity GamCare told BBC News it had, in the previous two years, heard from more than 300 people struggling with investing in cryptocurrency and other forms of online financial markets.
The Financial Conduct Authority is introducing the changes, following the government’s legislation that grants it authority over the promotion of digital assets.
The rules will apply to all companies marketing crypto in the UK. And the FCA will “take robust action” against those that break the rules, including taking their websites offline.
Consumers and competition executive director Sheldon Mills said its research showed “many regret making a hasty decision”. “It is up to people to decide whether they buy crypto,” he said.
“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.”
Crypto UK operations director Su Carpenter said the trade body agreed with “the principle” of the cooling-off period,but questioned the duration.
“We would welcome evidence-based findings on the rationale behind this proposal,” she said.
“We want to encourage a competitive and equal environment for the crypto-asset industry to continue to grow and innovate safely, whilst operating within appropriate safeguards and offering education and information to all consumers.