RPC reacts to the FCA's tough new rules for marketing cryptoassets

New FCA rules mean crypto firms must ensure that people have the appropriate knowledge and experience to invest in crypto. Those promoting crypto must also put in place clear risk warnings and ensure adverts are clear, fair and not misleading.  

Of Counsel, Whitney Simpson who specialises in non-contentious consumer finance and payment related matters, says:

"In a significant move aimed at safeguarding investors, the Financial Conduct Authority's (FCA) tough new regulations regarding the marketing of cryptoassets mark a notable expansion of its regulatory oversight to include certain cryptoasset promotions, aligning them with other high-risk investment products.

"The FCA's decision to tighten its grip on cryptoasset marketing should not come as a surprise. In February, the regulatory body indicated its intention to introduce an approach consistent with other high-risk investments, including the incorporation of "positive friction" measures and 24-hour cooling off periods. These measures were specifically aimed at reducing the potential harm caused by unscrupulous actors in the crypto market.

"By extending its remit to encompass qualifying cryptoasset promotions, the FCA acknowledges the need to protect consumers from the inherent risks associated with this emerging sector. Cryptoassets have gained significant popularity and traction, but they also carry substantial risks due to their volatility and lack of regulation.

"The introduction of stricter rules around marketing is a commendable step toward enhancing consumer protection. The FCA's oversight will undoubtedly help ensure that prospective investors are provided with accurate and transparent information about the risks involved. Such measures are vital for preventing potential financial harm and maintaining the integrity of the wider financial market.

"Under these new regulations, the FCA will be equipped to tackle misleading and deceitful advertising practices related to cryptoassets, curbing the spread of false promises and exaggerated claims. Once in force, investors should have a clearer understanding of the potential risks and rewards associated with crypto investments, enabling them to make more informed decisions.

"It is essential to recognize that the FCA's approach to qualifying cryptoasset promotions aligns with its overarching goal of maintaining market integrity and consumer confidence. While the regulations may impose stricter requirements on industry players, they ultimately foster an environment conducive to responsible growth and innovation.

"The FCA's determination to regulate qualifying cryptoasset promotions highlights the importance of adapting regulatory frameworks to keep pace with evolving financial landscapes. As the digital asset space continues to evolve, it is crucial for regulators to strike a balance between encouraging innovation and ensuring robust consumer protection."