UK Implements 24-Hour “Cooling-Off Period” for Crypto Transactions in Advertising Overhaul
In a significant move, crypto companies operating in the UK will be required to provide customers with a mandatory 24-hour “cooling-off period” as part of a comprehensive revamp in the way digital assets are marketed. This means that new investors will have to wait a full day before finalizing their transactions.
According to government estimates, approximately one in ten UK adults currently possesses some form of cryptocurrency. In order to ensure consumer protection and prevent hasty decisions, bosses of non-compliant companies could potentially face imprisonment of up to two years, hefty fines, or both.
The upcoming regulations, which will come into effect on 8 October, encompass a wide range of crypto-assets, including non-fungible tokens (NFTs) and popular digital currencies like Bitcoin. As part of the advertising overhaul, advertisements employing “refer a friend” schemes will be banned, while all other ads must adhere to principles of clarity, fairness, and truthfulness, without misleading consumers.
Following persistent demands for stricter oversight, the UK government is taking action to address concerns surrounding cryptocurrency. A recent report by a committee of Members of Parliament highlighted the resemblance between the characteristics of cryptocurrency and gambling rather than traditional financial services. Additionally, GamCare, a gambling-helpline charity, revealed that they had received over 300 distress calls related to cryptocurrency and other online financial markets in the past two years.
To address these issues, the Financial Conduct Authority (FCA) has been granted authority by the government to regulate the promotion of digital assets. The forthcoming regulations will apply to all companies involved in marketing cryptocurrencies in the UK. The FCA is determined to enforce compliance and will take decisive measures against those who violate the rules, including the possibility of taking their websites offline. These steps aim to instill a robust framework to safeguard consumers and maintain market integrity in the crypto industry.
Heightened Risk Levels Prompt Regulatory Action in Crypto Sector
Crypto Investors Warned of Unregulated and High-Risk Nature as Consumer Protection Measures are Introduced
Sheldon Mills, the Executive Director of Consumers and Competition, highlighted the findings of their research, revealing that numerous individuals expressed regret over impulsive investment decisions in the cryptocurrency realm. Mills emphasized that the ultimate decision to purchase crypto lies with individuals, but it is crucial for them to have sufficient time and receive accurate risk warnings in order to make well-informed choices.
While the new regulations aim to provide consumers with the necessary tools for informed decision-making, it is important to note that the crypto market remains largely unregulated and carries significant risks. Potential investors are advised to exercise caution and recognize the possibility of losing their entire investment capital. This cautionary stance underscores the importance of understanding the volatility and inherent uncertainties associated with cryptocurrency investments.
