The U.K.’s financial services regulator plans to tighten restrictions crypto-asset advertising after the government gives it increased power to regulate the industry and protect investors who may not fully understand the risks they are taking on.
- The Financial Conduct Authority (FCA) said it plans to classify crypto assets such that consumers would be able to respond to promotions only if they are high net worth or sophisticated investors.
- It also intends to ban incentives such as refer-a-friend and new-joiner rewards.
- “Too many people are being led to invest in products they don’t understand and which are too risky for them,” Sarah Pritchard, the FCA’s executive director of markets, said in a statement.
- The government began consulting on a proposed framework for regulating crypto promotions in 2020. Since then, the Advertising Standards Authority (ASA) has stepped in to ban misleading ads on a number of occasions. On Tuesday, the Treasury said it plans to introduce legislation to strengthen the rules governing crypto ads and hand the FCA the power to regulate the industry.
- The FCA asked for feedback on the proposals by March 23, and said it expects to confirm final rules by mid-year.