British consumers who purchase crypto assets from October 1st will be entitled to a mandatory 24-hour "cooling-off" period, to strengthen consumer protections. As a consequence, consumers will have a better chance of avoiding cryptocurrency scams.
Reuters reports that the Financial Conduct Authority (FCA) has imposed updated marketing rules based on concerns raised regarding the lack of direct regulation of crypto assets such as bitcoin on a global scale, as a result of concerns raised about the lack of direct regulation.
There will be a delay in the process of completing the transaction for new investors. Up to ten out of every ten adults in the UK own at least one form of cryptocurrency, according to government estimates.
There could be serious consequences for owners of companies who fail to comply with the regulation, such as jail time, fines, or both.
Specifically, the FCA's updated guidelines will eliminate "refer a friend" bonuses for crypto buyers, as well as require promoters to provide clear risk warnings and ensure that advertisements related to crypto assets are transparent, fair, and cannot mislead prospective buyers.
The FCA worked on similar regulations last year to address advertising for high-risk investments in traditional finance. These regulations have been implemented as a result of those regulations. In the coming years, the US government plans on passing an updated financial services law that will regulate crypto assets. This is aligned with Britain's plans to regulate crypto assets by 2020.
The rules, which are expected to take effect on 8 October, will apply to crypto assets, including digital currencies such as bitcoins. These assets have the qualities of being transferrable and fungible.
It follows that the updated advertising guidelines will not cover the purchase of non-fungible tokens (NFTs), with the only exception being that they will be forbidden by the updated guidelines from being offered as incentives for crypto investments.
A parliament committee reported last month that the characteristics of cryptocurrencies are "more closely related to those of gambling than the characteristics of financial services". In the past two years, GambCare, an organization that offers help people who are struggling with investing in cryptocurrency and other forms of online financial markets, has received more than 300 calls from people who need assistance.
Following the passage of legislation by the government to give it authority over how digital assets are advertised, the Financial Conduct Authority is bringing these changes into effect.
All crypto companies operating in the UK will be subject to the new rules and regulations. Those who break the rules will be subjected to a range of actions by the FCA, including removing them from their websites if they persist.
Sheldon Mills, who is the executive director of the Consumers and Competition Bureau, said that its research revealed that “many people regret making a hasty decision.”
Due to the increasing complexity of the cryptocurrency landscape, introducing mandatory 24-hour cooling-off periods in cryptocurrency advertisements is a significant step towards protecting consumers and promoting responsible investment practices to keep them safe and secure. With the updated ad rules, potential investors are given more time for thoughtful consideration and research, therefore reducing the risk of impulsive decisions and assisting them to make more informed decisions.
There is a need to reaffirm the commitment of regulators to striking a balance between fostering innovation and protecting the interests of individuals and organizations when it comes to regulating the exciting world of cryptocurrencies while monitoring the effectiveness of these measures.