Those marketing cryptoassets to UK consumers will need to introduce a cooling-off period for first time investors from 8 October 2023, under new advertising rules announced by the FCA.
As part of a package of measures designed to ensure those who buy crypto understand the risk, ‘refer a friend’ bonuses will also be banned.
The new rules mean crypto firms must ensure that people have the appropriate knowledge and experience to invest in crypto. Those promoting crypto must also put in place clear risk warnings and ensure adverts are clear, fair and not misleading.
The FCA’s rules follow government legislation to bring crypto promotions into the regulator's remit.
Sheldon Mills, Executive Director, Consumers and Competition, said:
'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.
'Consumers should still be aware that crypto remains largely unregulated and high risk. Those who invest should be prepared to lose all their money.
'The crypto industry needs to prepare now for this significant change. We are working on additional guidance to help them meet our expectations.'
The new rules come into effect as research from the FCA shows that the estimated crypto ownership has more than doubled from 2021 to 2022, with 10% of the 2,000 people surveyed stating that they own crypto.
The approach taken to the promotion of crypto is consistent with the rules introduced by the FCA last year to tackle misleading financial advertisements of high-risk investments.
It also supports the FCA’s three core commitments laid out in the 2023/24 business plan to reduce and prevent serious harm, set and test higher standards and promote competition and positive change.
The FCA is also consulting on additional guidance setting out expectations of firms advertising crypto to UK consumers. Those wishing to have their say will have until 10 August to respond.
Notes to editors
- PS23/6: Financial promotion rules for cryptoassets
- GC23/1: Guidance on cryptoasset financial promotions
- Research Note: Cryptoassets consumer research 2023 (Wave 4)
- CP22/2: Strengthening our financial promotion rules for high-risk investments, including cryptoassets.
- Following the announcement of the new rules, the FCA will publish a Guidance Consultation to provide further clarification on the expectations of firms communicating cryptoasset financial promotions to ensure promotions are clear, fair and not misleading.
- The new rules on promoting cryptoassets follow extensive work with the Government on their consultation on the Future Regulatory Regime for Cryptoassets and collaboration with international counterparts and the wider industry.
- Prior to the FCA’s remit including financial promotions for crypto products and services, the ASA had banned several crypto firms’ promotions for being misleading and irresponsible. For example, Luno’s out of home billboards told people it’s time to buy Bitcoin without a clear risk warning. Meanwhile, Arsenal Football Club’s promotion of its fan token with partner Socios on its website and Facebook was deemed by the ASA to have trivialised investing in crypto. The FCA will continue to work with the ASA. Please contact the Press Office for images.
- Under the new rules, firms promoting crypto products or services will need to include a clear risk warning such as: ‘Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more.’
- FCA clamps down on marketing of high-risk investments to consumers.
- In 2022, the FCA required firms to amend or remove 8,582 promotions - 14 times more than 2021.
- FSCS Attitudes to Investing in Cryptocurrencies research from April 2023 showed 54% of current, former and potential investors agreed that they could end up regretting purchasing crypto.
- FCA 2023/24 business plan.
- Find out more information about the FCA.