First-time investors in crypto assets will be offered a 24-hour cooling-off period as part of a wider crackdown on advertising in the industry by the UK’s financial regulator.
First-time investors in cryptoassets should be offered a 24-hour cooling-off period by those marketing them, according to the City regulator.
A new advertising crackdown being launched by the Financial Conduct Authority (FCA) will mean firms marketing cryptoassets to UK consumers will need to introduce a cooling-off period for first-time investors from 8 October.
The regulator’s policy statement on financial promotion rules for cryptoassets said: “Even when the financial promotions regime comes into force, cryptoassets will remain high risk and largely unregulated.
“Consumers should only invest in cryptoassets if they understand the risks involved and are prepared to lose all their money. Consumers should not expect protection from the Financial Service Compensation Scheme (FSCS) or Financial Ombudsman Service if something goes wrong.”
As part of the package of measures designed to ensure those who buy crypto understand the risks, the FCA said “refer a friend” bonuses will also be banned.
The regulator said it wants consumers to receive timely, high-quality information that enables them to make effective investment decisions without being pressured, misled or inappropriately incentivised to invest in products that do not meet their needs.
Firms promoting cryptoassets must put in place clear risk warnings and ensure adverts are clear, fair and not misleading, the regulator said.
The FCA’s rules follow Government legislation to bring crypto promotions into the regulator’s remit.
Sheldon Mills, executive director, consumers and competition at the FCA, said: “Consumers should still be aware that crypto remains largely unregulated and high risk. Those who invest should be prepared to lose all their money.
“The crypto industry needs to prepare now for this significant change. We are working on additional guidance to help them meet our expectations.”
