- The UK has issued new crypto regulation aimed at protecting investors
- Brits will now have a 24-hour “cooling off” period where they can back out of a crypto purchase
- Referrals will also be banned
The UK’s financial watchdog, the Financial Conduct Authority (FCA), has issued new guidelines for crypto firms, including changes in how they advertise and a ban on referrals. The FCA has changed its rulebook to include a 24-hour “cooling-off period”, meaning that new investors will have to wait a full day before they can complete transactions on UK-registered platforms. Referrals, which typically garner a bonus for the referrer, will be scrapped, while adverts must be “clear, fair and not misleading”. This represents the latest effort by the FCA to ensure that British crypto users are as aware of the risks as possible.
New Rules, Same Message
The FCA has been clamping down on crypto advertising in the UK for years, regularly fining companies that don’t make it clear how risky crypto investment is and trying to make it as obvious as possible that crypto investments can go to zero. Indeed, the FCA’s digital assets director recently that participants should be “prepared to lose all their money” when investing in cryptocurrencies.
The new rules introduce a ban on UK crypto companies offering a ‘refer a friend’ bonuses, while firms must ensure that investors have “appropriate knowledge and experience” before they start investing. Anyone who has been surprised by a pop-op quiz on Binance will be familiar with such practices.
Customers Given More Time
The FCA said that those marketing crypto assets to UK consumers will need to introduce a “cooling-off” period for first-time investors from 8 October, the date on which the new rules will take effect. Sheldon Mills, executive director of consumers and competition at the FCA, echoed this sentiment in a statement:
Consumers should still be aware that crypto remains largely unregulated and high risk. It is up to people to decide whether they buy crypto. But research shows many regret making a hasty decision. Our rules give people the time and the right risk warnings to make an informed choice.
The cooling-off period will be particularly useful for consumers: if the value of the coin goes up in that time then they can keep/sell it, but if it drops then they can simply reverse the transaction. The UK has recently decided to try and make itself a crypto hub, but with warnings like this still coming from the FCA it may be some time before it achieves this.
