The UK Government believes that the current rules are insufficient to protect consumers from misleading crypto coin advertisements and proposes a change.
The new proposals published on 20 July, if approved, would bring the advertising of certain types of cryptoactives under the direct regulation of the Financial Conduct Authority (FCA) for the first time.
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The Economic Secretary to the Treasury and Minister of the City of the United Kingdom, John Glen, said
„It’s important that people understand the financial products being promoted. If advertisements from unauthorised companies are misleading, or do not fully explain the risks, then people can end up losing money. That’s why we want to put more protections around those financial offers, including the promotion of cryptoactives, while ensuring that people have access to a wide range of products in the marketplace.
The current UK regulatory framework on financial advertising
The rules currently protecting consumers against misleading advertising of financial products in the country require that any unauthorized company seeking to promote a particular product be approved by an authorized counterpart.
However, the UK government is now concerned that, with the proliferation and variety of new financial instruments, these requirements are insufficient and can no longer provide a strong enough guarantee.
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Two new proposals submitted on 20 July require authorized companies to obtain the specific consent of the FCA in order to approve the financial offers of their unauthorized counterparts. The introduction of this requirement is intended to strengthen the institution’s direct supervision of potential announcements.
As crypto advertising is currently not regulated, the United Kingdom seeks to extend the scope of its financial promotions regime to include certain cryptoactives, so that „their promotion is carried out to the same high standards of fairness, clarity and accuracy as applied to traditional financial services promotions“.
UK authorities seek wider, more comprehensive approach to cryptology regulation
As previously reported by Cointelegraph, the FCA recently issued a statement calling on all local operators of crypto businesses to register with the authority by 30 June.
FCA investigation indicates that 2.6 million UK residents have purchased cryptomoney
The registration guidelines involve a number of specific compliance fees, mainly in relation to anti-money laundering and anti-terrorist financing measures.
All UK operators have until mid-January 2021 to process their applications, and similarly there are new requirements for traditional fintech operators to process a new application with the authority.