In a move to strengthen consumer protection, the financial regulator announced on Thursday that British consumers purchasing crypto assets will have a mandatory 24-hour "cooling-off" period starting in October. The Financial Conduct Authority (FCA) introduced these stricter marketing rules due to concerns surrounding the lack of direct regulation for crypto assets like bitcoin on a global scale, as reported by Reuters. The downfall of FTX last year, which resulted in significant losses for investors, including some in Britain, has prompted regulators to scrutinize the industry more closely.
Under the new guidelines, the FCA will eliminate "refer a friend" bonuses for crypto buyers, and promoters of crypto assets will be required to provide clear risk warnings and ensure that advertisements are transparent, fair, and not misleading. These regulations mirror those implemented by the FCA last year to address advertising for high-risk investments in traditional finance. The introduction of these crypto rules aligns with Britain's plan to regulate crypto assets through a new financial services law later this year.
Sheldon Mills, the executive director at the FCA's consumers and competition division, emphasized that individuals have the autonomy to decide whether to invest in crypto, but many have regretted making impulsive decisions. Mills further noted that consumers should be mindful of the fact that crypto remains largely unregulated and carries high risks.
According to FCA research, the estimated ownership of crypto assets has more than doubled from 2021 to 2022, with approximately 10 per cent of the 2,000 surveyed individuals claiming to own crypto assets.
As part of the new rules, crypto firms will be obligated to display warnings 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."
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