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The FCA’s move to impose changes on the advertising of cryptocurrency is sure to have serious implications for the market

Author: Syedur Rahman  21 January 2022

The Financial Conduct Authority (FCA) is looking to tighten the rules on advertising as it prepares to oversee the promotion of cryptocurrencies.

In an announcement, the FCA said it had been considering rules for advertising high-risk investments, as a result of what it called a “rapid growth’’ in risk-taking during the coronavirus pandemic.

The FCA’s announcement is likely to promote serious thinking by companies that market crypto assets and services. Its draft rules include details of how it intends to govern adverts. They come in the wake of Spain, Italy and Singapore all introducing measures to protect consumers regarding cryptocurrency advertising.

The new UK rules will ban payments to new customers who sign up or refer their friends. They will also require tougher wording on risk warnings in adverts and impose new conditions that will have to be met before planned promotions can be published.

In 2021, the FCA stated that approximately 2.3 million UK residents owned some crypto assets. But it said its research found that consumers who bought tokens based on adverts were more likely to regret their decision.

The FCA also intends to rewrite its marketing restrictions for other categories of high-risk investment, such as minibonds. 

FCA chair Charles Randell has previously voiced frustration at not being able to take action against certain cryptocurrency advertising campaigns. With cryptocurrency adverts coming under the oversight of the FCA, most of them will need to be from a company authorised by either the regulator itself or the Prudential Regulation Authority. Some crypto-related businesses may even struggle to find an authorised firm to check its adverts.

The FCA’s planned changes are likely to result in less crypto adverts being seen. They will, to some extent, give a degree of confidence to those who are considering investing in such products, and can be seen as an important move towards enhanced consumer protection.

But, at the moment, it is unclear exactly what types of institution or company will be allowed to advertise. There will also need to be further clarity at some stage on precisely how the FCA plans to govern these types of adverts. There is, arguably, a case to be made for the Advertising Standards Authority being made to take a closer look at the adverts that are being produced, in order to ensure everything possible has been done to ensure that consumers are made fully aware of the risks of investing.

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Syedur Rahman is known for his in-depth experience of serious fraud, white-collar crime and serious crime cases, as well as his expertise in worldwide asset tracing and recovery, civil recovery, cryptocurrency and high-stakes commercial disputes.

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