FCA aims to regulate the uncontrolled environment surrounding cryptocurrency promotion and safeguard first-time investors.
The UK's Financial Conduct Authority (FCA) has initiated a set of stringent guidelines that will affect cryptocurrency service providers' advertising practices starting October 8th.
Kick-starting new regulations, the FCA announced on June 8th the introduction of a mandatory "cooling-off period" for new investors. This period aims to minimize impulsive investment decisions, often the result of misleading advertisements.
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Furthermore, the regulator has banned the widespread practice of "refer a friend" incentives among cryptocurrency firms.
Cryptocurrency investment decision ultimately lies with the individuals, acknowledged Sheldon Mills, FCA's executive director of consumers and competition.
However, the man pointed out that research often unveils regret among those who have made thoughtless decisions, emphasizing the necessity for these regulatory measures.
Informed decision-making should be at the heart of every investment, and these new rules will encourage such practices, as stated in Mills's official statement. On top of that, Mills noted:
The crypto industry needs to prepare now for this significant change. We are working on additional guidance to help them meet our expectations.
On top of that, the FCA is mandating cryptocurrency firms to establish the investors' know-how and evaluate their prior experience with cryptocurrencies before permitting them to invest. As for the promoters, they are now bound by law to provide comprehensive risk warnings and ensure their advertisements are accurate, transparent, and free of misinformation.
The FCA's tightened regulations are in line with broader government legislation seeking to bring cryptocurrency promotions under stricter regulatory supervision. In May, the news broke that the UK is set to prohibit cold calls promoting financial products like insurance and cryptocurrencies.
The latest actions taken by the FCA underline the growing attention regulators worldwide are giving to the crypto industry, signifying an era of increased scrutiny.
