British consumers need stronger rules to protect them from deceptive crypto ads, says U.K. minister.
The government of the United Kingdom believes that current rules do not go far enough to protect consumers from misleading crypto ads and is advocating change.
New proposals published on July 20 would, if approved, bring the promotion of certain types of crypto assets under direct regulation from the Financial Conduct Authority — or FCA — for the first time.
The U.K.’s Economic Secretary to the Treasury and City Minister, John Glen, said:
“It’s important that people can understand the financial products they see promoted. If adverts by unauthorised firms are misleading, or don’t fully outline the risks, then people can end up losing money. That’s why we want to put more protections in place around such financial promotions, including the promotion of cryptoassets, while continuing to ensure people have access to a wide range of products on the market.”
The U.K.’s current regulatory framework for financial ads
The rules that currently protect consumers from misleading ads for financial products in the U.K. require any unauthorized company that seeks to promote a particular product to have their promotion approved by an authorized counterpart.
However, the U.K. government is now concerned that, with the proliferation and variety of new financial instruments, these requirements fall short and can no longer provide a strong enough safeguard.
Two new proposals set forth on July 20 would require authorized firms to obtain the FCA’s specific consent to approve the financial promotions of their unauthorized counterparts. Introducing this requirement is intended to strengthen the FCA’s direct oversight over prospective ads.
With crypto advertising unregulated at present, the U.K. seeks to expand the reach of its financial promotions regime to include certain crypto assets, so that “their promotion would be held to the same high standards for fairness, clarity and accuracy that apply to traditional financial services promotions.”
The U.K. pursues a more wide-ranging and holistic approach to crypto regulation
Registration guidelines entail a number of specific compliance quotas, primarily in relation to Anti-Money Laundering and Counter-Terrorism Financing measures.
All operators in the U.K. have until mid-January 2021 to have their applications processed, and there are also new requirements for traditional fintechs to process a fresh application with the FCA.