UK to curb crypto advertising with ‘cooling off’ periods

The latest rules, announced by the Financial Conduct Authority (FCA), will also prohibit “refer a friend” incentives in cryptoasset marketing

The UK financial regulator is clamping down on crypto marketing in a big consumer protection move that will put in place a “cooling-off period” for first-time investors.

The latest rules, announced by the Financial Conduct Authority (FCA), will also prohibit “refer a friend” incentives in cryptoasset marketing.

The rule is designed to make sure UK consumers have sufficient time to know the risks of crypto investments ahead of putting in considerable funds into them.

Crypto proponents will also have to put in place clear risk cautions and make sure advertisements are not deceptive.

The new rules will apply from 8 October 2023 and follow government legislation to bring crypto advertising into the Financial Conduct Authority’s remit.

It is up to people to decide whether they purchase crypto. However research shows many repent making a hurried decision. Our rules give people the time and the right risk warnings to make an informed choice, said Sheldon Mills, executive director of consumers and competition at the Financial Conduct Authority.

Consumers should still be aware that crypto continues to be largely unregulated and high risk. Those who invest should be ready to lose all their money, Mills said.

The crypto sector needs to prepare now for this important change. We are working on additional guidance to assist them meet our expectations, Mills said.

It comes as part of a broader clampdown by the Financial Conduct Authority on crypto marketing. Earlier, enforcement had fallen under the remit of the Advertising Standards Authority, which prohibited a number of crypto promotions by Arsenal Football Club regarding social media posts. The watchdog found that the posts were deceptive and failed to explain the risks of investing in cryptoassets.

In April, the Treasury Committee called for consumer cryptocurrency trading to be regulated just as gambling.

MPs have also called for relevant cryptoasset regulation by 2025, dedicated cryptocurrency units and a “crypto tsar” to make sure the UK can be an early leader in the sector.