The UK’s Financial Conduct Authority (FCA) has introduced new rules requiring crypto firms to include risk warnings in ads and offer a ‘cooling off’ period for novice investors.
In a move aimed at strengthening consumer protection in cryptocurrency, the Financial Conduct Authority (FCA), the UK’s financial watchdog, declared that crypto companies must incorporate clear risk warnings in their advertising starting October 8. The new regulations also dictate that these companies offer first-time investors a “cooling off” period.
A typical risk warning, as per the FCA, would caution customers about the potential of complete loss and the absence of safeguards “if something goes wrong.” Moreover, firms advertising crypto assets, including popular cryptocurrencies like bitcoin (BTC), will have to provide a pause period to novice investors looking to invest.
Sheldon Mills, the FCA’s executive director of consumers and competition, emphasized that the crypto sector remains largely unregulated and carries high risk. Despite these risks, crypto ownership in the UK doubled between 2021 and 2022, per the FCA’s survey.
Furthermore, the FCA noted increased crypto asset fraud, with reported crypto scams escalating from 1,619 in 2019 to 6,372 in 2021.
The upcoming regulations are part of a broader plan to align crypto regulation with traditional assets like stocks and bonds, as revealed by the UK Treasury in February.