UK government announces crackdown on crypto advertising
The government has announced plans to toughen up rules on crypto advertising amid concerns the public is at risk from misleading ads.
HM Treasury today announced plans to beef up the regulatory powers of the Financial Conduct Authority (FCA) in relation to crypto, with digital assets due to be subjected to the same rules on promotions as other financial products including stocks, shares and insurance products.
The government cited concerns that while 2.3m people in the UK are thought to own crypto some investors still do not fully understand what they are buying.
Chancellor of the Exchequer, Rishi Sunak said “crypto assets can provide exciting new opportunities, offering people new ways to transact and invest – but it’s important that consumers are not being sold products with misleading claims.
“We are ensuring consumers are protected, while also supporting innovation of the cryptoasset market,” he continued.
The government said it will use secondary legislation to bring crypto advertising within the scope of FCA rules, giving the watchdog power to regulate the market more effectively.
Firms that wish to promote unregulated crypto investments and activities will have to comply with binding rules that financial promotions are clear, fair and not misleading with the FCA consulting on new rules for crypto adverts.
The campaign against Crypto advertising
It comes amid a campaign against misleading crypto promotions spearheaded by the UK’s Advertising Standards Agency (ASA) which last month labelled crypto assets a red-alert priority. The ASA has banned crypto promotions by Arsenal Football Club, Coinbase and Papa John’s among others with the regulator telling City PM that it expects to publish its own guidance on crypto asset advertising in the next six months.
“You only have to glance through a few cryptocurrency adverts to see that many overstate the potential returns on offer and fail to clearly lay out how much risk individuals will be taking,” said Laura Suter, head of personal finance for DIY investment platform AJ Bell.
“While the move will help some people, it won’t stop the outright scams that have exploded off the back of Bitcoin and other cryptos soaring in price,” Suter continued warning that the majority of crypto scams are promoted via social media.
“What would have a far bigger impact is cracking down on social media accounts where people claim to have made their millions from buying Bitcoin, most of which are ultimately scams or glorified pyramid schemes,” she continued.
Read more: Spain leads the way in European crypto advertising crackdown