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Advertisement About Crypto in UK Will Be Tightened Because It Is Rated As A Risky Asset

Starting in October, the financial regulator in the UK has introduced stricter marketing rules offering UK consumers a 24-hour “cooling down” period for their initial purchase of crypto assets.

This move marks the first time such a provision will be implemented, as global regulations for Bitcoin (BTC) class assets are still relatively limited.

However, recent events, such as last year's FTX collapse and the resulting financial loss for investors, including some in the UK have prompted regulators to scrutinize the crypto industry closely.

Launching from reuters.com, the Financial Conduct Authority (FCA) in the country has announced that the “refer a friend” bonus for crypto buyers will be discontinued. Additionally, those promoting crypto assets must provide clear risk warnings and ensure that their advertising is fair, transparent and not misleading.

The new rules for assets are similar to measures put in place by the FCA last year to tackle advertising of high-risk investments in traditional finance. The implementation of this regulation coincides with the UK's plans to regulate cryptocurrencies under a new financial services law later this year.

Advertisement About Crypto in UK Will Be Tightened Because It Is Rated As A Risky Asset

Sheldon Mills, executive director in FCA's consumer division said that while individuals have the freedom to decide whether to buy crypto assets, research shows that many people regret making impulsive decisions in this regard.

“Consumers should be aware of the lack of regulation surrounding cryptocurrencies and the high risks associated with them,” said Mills.

According to FCA research, estimates of holding crypto assets will more than double from 2021 to 2022. This is based on survey results, which show that 10 percent of the 2,000 individuals surveyed claim to own the assets.

With this in mind, crypto companies are required to include warnings such as “Do not invest unless you are prepared to lose all the money you invest”, or “This is a high risk investment, and you are not protected in case of loss”.

Meanwhile, Myron Jobson, who is a senior personal financial analyst, welcomed the new rules. He highlighted that crypto advertising has become an unregulated landscape filled with dubious claims and misleading information.

"The challenge for regulators lies in establishing a strong framework, which ensures all participants understand the standards of good practice," he said.

The FCA's efforts to introduce stricter marketing rules and provide a cooling-off period for crypto buyers, aim to protect UK consumers from the potential risks associated with the volatile and largely unregulated crypto market.

Regulatory measures are aligned with the growing interest in these digital assets and the need to balance innovation with consumer protection.

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