- Crypto firms in the UK and those based overseas will need to soon follow new advertising guidelines set by the Financial Conduct Authority.
- The regulator said that those crypto companies that fail to comply with the new financial promotions regime would face up to two years in prison.
- The new rules haven’t been finalized yet, but crypto firms will need to use specific risk warnings and positive frictions like a 24-hour cooling-off period.
- The regulator gave no comments as to when it was going to introduce the new rules.
Crypto firms in the United Kingdom will soon be required to follow new advertising guidelines following a warning from the country’s Financial Conduct Authority.
In a statement published on Monday, the financial regulator said that those companies that fail to comply with the upcoming financial promotions regime would face up to two years in prison.
While the new rules have yet to be finalized, crypto firms will be subject to the same rules that other high-risk investments follow, including specific risk warnings and positive frictions like a 24-hour cooling-off period. Crypto promotions must also be “clear, fair, and not misleading.”
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The financial regulator also warned that users wouldn’t receive their funds back if they lost them in crypto.
“We have repeatedly warned that consumers should be prepared to lose all of their money if they buy cryptoassets. Recent events such as the high-profile failure of several cryptoasset firms further highlight the riskiness of these products. There is unlikely to be any compensation under the Financial Services Compensation Scheme for consumers who lose money,” the statement said.
The Financial Conduct Authority added that crypto firms in the UK and those based overseas, regardless of what technology is used to promote, “should get ready for the new regime.”
On the Flipside
- It’s unclear when the new financial promotions regime will be introduced.
Why You Should Care
There are many misleading advertisements in the crypto industry. While the new ad rules in the UK should make it safer for users to choose their crypto products, they should still do thorough research before deciding what to use and where to invest money.
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