The UK’s financial regulator has implemented stricter rules regarding the promotion and sale of cryptocurrencies in an effort to safeguard consumers.
The Financial Conduct Authority (FCA) has introduced a series of measures to address the lack of oversight and potential risks associated with the cryptocurrency industry.
As per the new regulations, companies promoting cryptocurrency products or services in the UK will be required to provide a “clear warning” to customers about the possibility of financial losses in high-risk investments.
Marketing firms must also institute a cooling-off period for first-time crypto investors. Additionally, the FCA will ban referral bonuses designed to incentivize cryptocurrency investments.
Sheldon Mills, the head of consumers and competition at the FCA, emphasized that these rules aim to provide individuals with adequate time and appropriate risk warnings to make well-informed decisions.
The FCA’s announcement comes after the UK government took steps earlier this year to bring cryptocurrency promotions within the purview of the regulatory authority. UK lawmakers are also pushing for the regulation of crypto investments in a manner similar to the gambling industry.
In response to the FCA’s announcement, Su Carpenter, the director of operations at industry group CryptoUK, expressed concerns that the new rules may hinder new entrants and potentially concentrate market power among authorized firms.
Carpenter highlighted the risk of unregulated firms operating from outside the UK, which could create a competitive disadvantage for UK-based organizations and undermine consumer protection.
The FCA’s clampdown follows a trend of increased regulation in the United States. The Securities and Exchange Commission (SEC) recently filed a lawsuit against Coinbase, accusing the leading US digital currency trading platform of unlawfully facilitating the trading of crypto asset securities.
The SEC has also brought charges against Binance, a major cryptocurrency platform, and its founder for alleged securities law violations.
These developments come in the wake of the high-profile collapse of FTX, a prominent cryptocurrency exchange, which has raised concerns about the unregulated nature of the industry, often referred to as the “Wild West” by critics
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