Government to regulate crypto advertising in new crackdown

The UK government has announced plans to crack down on cryptocurrency product advertising to prevent consumers from being misled into their purchases.

The Treasury claimed that around 2.3 million people in the country now own some form of “crypto-asset”, but that understanding of these financial products is declining. This could lead to them being mis-sold to investors, he warned.

As a result, the government will legislate to ensure that the promotion of crypto-assets is subject to the same Financial Conduct Authority (FCA) rules as other financial promotions such as stocks, shares and insurance products.

Specifically, it will do so by amending the existing financial promotion order.

“Under the Financial Services and Markets Act 2000, a business may only promote a financial product if it is authorized by the FCA or the Prudential Regulator, or if the content of the promotion is approved by a company that is”, explained the Treasury.

“Companies wishing to promote such investments and activities must comply with binding rules that financial promotions must be fair, clear and not misleading.”

According to a 2021 study by financial regulator the FCA, more than 4% of the population now own cryptocurrency assets, at a median value of £300.

However, while consumers are less likely to cite such investments as a “gamble”, those who are convinced by the ads “are much more likely to regret their purchase”.

Mis-selling is not the same as outright fraud, as the products being sold are genuine, unlike those offered by many cryptocurrency investment scammers.

However, this practice is another example of the difficulties facing potential investors in what is still something of a Wild West for consumers.

Investment fraud is one of the most profitable cybercrimes, according to the FBI. It revealed that more than $336 million was lost to scammers in 2020, more than any other crime category except romance scams and compromise of work emails.

“Crypto-assets can provide exciting new opportunities, giving people new ways to transact and invest – but it’s important that consumers don’t see themselves selling products with misleading claims,” he said. Chancellor Rishi Sunak.

“We ensure that consumers are protected, while supporting innovation in the crypto-asset market.”