UK Rolls out Stricter Crypto Rules
UK's FCA Enforces New Rules for Crypto Firms, Ignites Mixed Industry Responses
The UK's Financial Conduct Authority (FCA) is ramping up efforts to protect consumers from potential risks associated with cryptocurrency investments and firms. The FCA announced new marketing rules for crypto businesses on June 8, based on regulations for high-risk traditional finance investments.
The FCA now categorizes cryptocurrencies like Bitcoin, Ethereum, Dogecoin, Litecoin, among others, as high-risk, restricted mass market investments. Crypto firms will now be required to include detailed risk warnings in their marketing campaigns. In addition, the "refer a friend" scheme, which rewards users for referring new investors, will be banned.
The FCA is also introducing a 24-hour "cool off" period for new crypto investors. Newly registered users must wait a full day before they can make any purchases. Sheldon Mills, executive director of the FCA's Consumers and Competition Division, commented on these new regulations set to take effect on October 8, 2023, reminding consumers that cryptos are largely unregulated and high risk.
Despite the FCA's consumer protection mandate, resistance is expected from some crypto firms. CryptoUK, a self-regulating crypto industry trade association, questioned the necessity of the 24-hour "cool off" period. The organization's Operations Director, Su Carpenter, also stated that regulations should allow consumers to transact and invest in crypto assets confidently, recognizing their multiple use cases beyond investments.
