UK Goes Tough On Cryptocurrency Sector

The British financial regulator on Thursday went firm regarding rules on the promotion and selling of cryptocurrency in a bid to protect unwary consumers.

To this end, the Financial Conduct Authority unveiled a package of measures for the industry, which has long faced criticism over the lack of oversight — and promises of high returns in a volatile marketplace.

Given these new rules, all companies promoting crypto products or services in Britain must from October give a “clear warning” that states customers could lose money in “high-risk” investments. 

Marketing firms must also introduce a cooling-off period for first-time crypto investors.

Under the development, the watchdog will also ban “refer a friend” bonuses that are designed to incentivise crypto investing.

“Our rules give people the time and the right risk warnings to make an informed choice,” said Sheldon Mills, head of consumers and competition at the FCA. 

The announcement is coming on the heels of Britain introducing legislation earlier this year to bring crypto promotions under the scope of the FCA.

Moreover, UK lawmakers are also demanding that crypto investments in Britain be regulated, in much the same way as the country’s gambling industry. 

While responding to the FCA announcement, the director of operations at industry group CryptoUK, Su Carpenter, hinted that the new rules could prevent fresh entrants.

“There is a risk that this solution will both unfairly concentrate market power for those firms which are already authorised and potentially encourage unauthorised firms to operate from outside of the UK,” Carpenter said.

That could, in turn, create “a competitive disadvantage for UK-based organisations and also potentially undermining consumer safeguards”, she added in a statement.

The consensus opinion is that the FCA clampdown follows similar moves toward tighter regulation in the United States.