The UK's Financial Conduct Authority (FCA) has established rules for advertising and promotion of digital currencies in the country. The new rules will come into force on October 8.
Under these FCA regulations, cryptocurrencies will be considered "restricted investments" and digital asset companies, along with issuers, must include warnings in their promotional materials about the risks associated with such investments. Moreover, methods such as "invite a friend" or "new participant bonuses" will be prohibited. Another significant change is the introduction of a "thinking investment" period for new investors; during this period, consumers will not be able to send funds linked to a direct financial offer without a request for reconfirmation after at least 24 hours.
Sheldon Mills, FCA executive director of consumer protection and competition, stressed that people should make their own decisions when it comes to buying cryptocurrencies. However, FCA research has shown that many of them regret doing so afterwards. This is why the new rules give people enough time to make an informed decision, he said. To illustrate this point, he referred to a study conducted by the agency involving 2,000 people. It found that 40% were motivated by excitement when buying digital coins, while around 30% regretted their investment in crypto-assets.
As for the rules themselves - any breach could result in up to two years' imprisonment; crypto-assets must be sufficiently secured and investors must be given as much detailed information as possible so as not to be misled.
Su Carpenter, chief operating officer of CryptoUK, the UK cryptocurrency trade association, called the regime overly restrictive. He fears that only a limited number of organisations will comply with the new rules and that these strict restrictions will damage the national cryptocurrency sector.
This year, the FCA said 85% of digital currency companies failed to comply with anti-money laundering regulations, leading to numerous applications for registration being rejected.