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The UK government is proposing to control all fraudulent crypto asset advertising. As a result, advertisements will be brought into line with other financial marketing, ensuring that they are accurate and fair. New rules will provide enhanced consumer protection while also promoting innovation.
UK’s Crypto Adverts Regulation
According to research, more than two million individuals in the United Kingdom now possess cryptocurrency. With increasing interest in cryptocurrencies, research reveals that people’s knowledge of cryptocurrency is low. This implies that some customers may not fully comprehend what they are buying. As a result, it raises the concern that the crypto might be mis-sold.
The government’s response today outlines its strategy to encourage crypto assets within the purview of financial promotions legislation. This indicates that promotional activities for qualifying crypto assets would be subject to FCA regulations. In keeping with the same high standards that other financial promotions, such as equities, stocks, and insurance products, must meet.
As a result, this will balance the desire to stimulate innovation with the requirement that crypto asset advertising is accurate, precise, and not deceptive. Rishi Sunak, Chancellor of the Exchequer, said: “Cryptocurrencies may provide exciting new possibilities. This opens up new ways for people to do business and invest. However, customers mustn’t be misled with phony claims about their products.”
Government’s Crypto support
The government is focused on fostering innovation in cryptoassets. It recognizes the potential advantages of certain goods, such as stablecoins, and is eager to help entrepreneurs take advantage of those possibilities. The government established the Cryptoasset Task Force in 2018 to continue steering the UK’s regulatory response to the cryptoasset market.
The FCA, however, has indicated that fraudulent advertising of crypto goods may result in consumer loss. The government’s decision to include these kinds of marketing in the scope of regulation will help lessen the potential for consumer harm. This is done by ensuring that consumers are given all of their information to make educated financial decisions.
This will be done by secondary legislation altering the Financial Promotion Order. It defines the investments and activities covered by the financial promotion regime. The government intends to put in place a six-month transitional period. It is between the finalization and publication of the proposed Financial Promotion Order regime and the complementary FCA rules.
Under the Financial Services and Markets Act 2000, a company cannot distribute a financial service or product unless authorized by the FCA or PRA. In addition, the promotion’s content has been assessed by an organization.
The bill will be presented once parliamentary time allows. Today’s announcement furthers the government’s earlier study of crypto assets and stablecoins. It includes plans for a regulatory framework for stablecoins, with future actions to be announced later.
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