UK crypto firms will be required to introduce a “cooling-off” period for new investors and warn traders that they won’t be protected should their investments not pan out. This is under new rules, set to come into force from October.
The new regulations, imposed by the UK’s Financial Conduct Authority (FCA), state that firms offering crypto services and products will need to include clear risk warnings in their adverts.
According to the watchdog, one example would include telling customers they shouldn’t expect protection “if something goes wrong” and should be prepared to lose all the money they invest.
Customers should also be advised to “take two mins to learn more,” and bonuses for introducing friends to products will also be banned, the FCA also said.
“It is up to people to decide whether they buy crypto,” the FCA’s executive director of consumers and competition told The Guardian. “But research shows many regret making a hasty decision. Our rules give people the time and the right risk warnings to make an informed choice.”
“Consumers should still be aware that crypto remains largely unregulated and high risk. Those who invest should be prepared to lose all their money,” they added.
Clock is ticking on the UK’s crypto leader status
The announcement comes just days after the UK was warned that it has just 18 months to become a global crypto leader, and was urged to appoint a ‘Crypto Tsar.’
In June, the country’s crypto and digital assets all-party parliamentary group (APPG) published 53 recommendations for how the UK government should act, warning that the UK “still remains in the very early stages of regulation.”
The group sought advice from crypto regulators, experts, and parliament sessions and found that, while progress has been made since former chancellor and current prime minister Rishi Sunak first announced plans to become a global crypto leader, “much of the progress thus far has focused on specific issues without being part of a wider strategy.”
The government needs to define a clear, overarching action plan to deliver on its vision, the APPG urged. To help do this, and in order to make robust regulation happen, a “whole of government approach” is needed, the APPG said.
To that end, it suggested the government appoint a so-called ‘Crypto Tsar’ who has a strong overview of all departments in order to ensure consistency, the development of specialist knowledge and expertise, and strong regulation.