Britain’s financial regulator on Thursday tightened rules on the promotion and sale of cryptocurrencies to protect consumers.
The Financial Regulator (FCA) unveiled a package of measures for the industry, which has long been criticized for a lack of oversight and promising high returns in a volatile market.
According to the new rules, companies promote crypto Products or services in the UK must carry a “clear warning” from October that customers could lose money on “risky” investments.
Marketing firms must also implement a cooling-off period for first-time investors in cryptocurrencies.
And the regulator will also ban refer-a-friend bonuses designed to incentivize crypto investing.
“Our rules give people time and the right risk warnings to make an informed decision,” said Sheldon Mills, FCA’s head of consumer and competition.
The announcement came after the UK enacted legislation earlier this year to bring crypto promotions under the FCA’s purview.
British lawmakers are also calling for crypto investments to be regulated in the UK, much like the country’s gambling industry.
In response to the FCA’s announcement, Su Carpenter, operations director at industry group CryptoUK, said the new rules could discourage new market entrants.
“There is a risk that this solution will unfairly concentrate the market power of those already authorized and potentially encourage unauthorized companies to operate from outside the UK,” Carpenter said.
This, in turn, could “create a competitive disadvantage for UK-based businesses and potentially undermine consumer protections as well,” she added in a statement.
The FCA’s crackdown follows efforts towards stricter regulation in the United States.
The Securities and Exchange Commission sued a crypto platform on Tuesday Coinbasewith allegations that the largest US digital currency trading platform made billions of dollars by “unlawfully facilitating the buying and selling of crypto assets.”
The SEC also this week filed indictments against Coinbase competitor Binance and its founder Changpeng Zhao on numerous alleged securities law violations.
The news follows the spectacular failure of the crypto exchange giant FTX in November, stoking concerns about what some critics are calling a “wild west” market.
