The UK government has announced new measures to crack down on misleading promotions of cryptocurrencies and crypto tokens.
In a statement released this morning, the government says it will ensure crypto adverts will be brought into line with other financial advertising, ensuring they are fair and clear.
The UK’s move follows a similar initiative announced yesterday in Spain.
Singapore yesterday took a more dramatic step, banning crypto ads completely.
According to the UK Treasury, around 2.3 million people in the UK are now thought to own a cryptoasset, with numbers on the rise.
“Research suggests that understanding of what crypto actually is is declining, suggesting that some users may not fully understand what they are buying. This poses a risk that these products could be mis-sold,” the Treasury said.
According to consumer research commissioned by the UK’s Financial Conduct Authority, only 71 percent of those who had heard of cryptoassets correctly identified their definition, while 31 percent of cryptoasset holders that saw an advert were encouraged to buy as a result.
The government said it would introduce legislation to amend the Financial Promotion Order, which sets out the investments and activities to which the UK’s financial promotion regime applies.
Under the Financial Services and Markets Act 2000, a business cannot promote a financial product unless it is authorised by the Financial Conduct Authority or the Prudential Regulation Authority, or the content of the promotion is approved by a firm which is.
Firms that wish to promote such investments and activities must comply with binding rules that financial promotions must be fair, clear, and not misleading.
There will be a six-month transitional period before the new rules are introduced.
According to Bradley Rice, a partner at law firm Ashurst, the UK’s new guidance will have a major impact on crypto-related advertising.
“These changes to the UK financial promotion regime will bring about monumental changes to how firms offer, promote and market cryptoassets in the UK or to persons in the UK. This could be game-changing,” said Rice.
“This regime will mean regulated firms are at an advantage over unregulated firms because they will be able to issue their own promotions. Unregulated firms will need to find an authorised firm willing to approve their promotions and there is a lot of focus on this sector from all angles.
“If providers do offer the service, it won’t be cheap,” said Rice.
According to the Guardian, there has been an explosion in cryptocurrency-related advertising on London’s public transport network.
Transport for London, the operator of London’s public transport system, had shown 39,560 crypto adverts from 13 firms on its trains, buses and in stations in the six months between April and September 2021, the Guardian wrote last week.
The boom in crypto ads jarred with an April pre-election promise by London’s mayor, Sadiq Khan, to remove all gambling advertisements from the public transport system.
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