Figures released by the FCA last year suggest 2.3 million Britons now own cryptocurrencies, but many consumers have made an investment without being aware of the risks.
The U.K. has unveiled plans to clamp down on misleading cryptocurrency adverts.
Under the proposals, digital assets will be subject to the same rules as stocks, shares and insurance products.
While the government says it wants to encourage innovation, it also wants ads to be "fair, clear and not misleading."
The changes mean crypto ads will fall under the Financial Conduct Authority's remit — and it wants to "address concerns about the ease and speed with which people can make high-risk investments."
Top priorities include beefing up the risk warnings that appear on ads, as well as banning incentives to invest. This means "refer-a-friend" bonuses could soon become a thing of the past.
Figures released by the FCA last year suggest 2.3 million Britons now own cryptocurrencies, but many consumers have made an investment without being aware of the risks.
A consultation on the FCA's proposals is now being held until March, paving the way for finalized rules to be confirmed in the summer. The regulator's executive director of markets, Sarah Pritchard, said:
"Too many people are being led to invest in products they don’t understand and which are too risky for them. People need clear, fair information and proper risk warnings if they are to invest with confidence, which is the central aim of our consumer investment strategy."
Listen to the CoinMarketRecap podcast on Apple Podcasts, Spotify and Google Podcasts
'Eager to Support Innovation'
The U.K. appears to be striking an upbeat tone with its announcement — with the government "eager to support innovation in cryptoassets." Chancellor Rishi Sunak added:
"Cryptoassets can provide exciting new opportunities, offering people new ways to transact and invest — but it's important that consumers are not being sold products with misleading claims. We are ensuring consumers are protected, while also supporting innovation of the cryptoasset market."
In particular, the government says that it recognizes how stablecoins can provide "a more efficient means of payment" — reducing fees and waiting times once funds have been sent.
It also marks a more proactive approach. Although the Advertising Standards Authority has played a significant role in scrutinizing crypto ads so far, this regulator only ends up launching investigations once problematic promotions are in the public domain.
Crypto ads have become increasingly prolific over recent months, especially in London. Earlier this month, a Freedom of Information request by The Guardian revealed that there were 40,000 crypto-related adverts on the capital's transport network between April and September 2021, with some politicians calling for them to be banned altogether.
Other countries are also beginning to take action. On Monday, Spain unveiled new measures that mean advertisers will need to provide "clear, balanced, impartial and non-deceptive content" on the risks involved with investing in digital assets.
Anyone planning to launch a mass advertising campaign targeting at least 100,000 people must get in touch with the National Securities Market Commission first — 10 days in advance. Influencers who endorse companies and products on social media sites will also be subject to these rules.
The FCA makes no mention of influencers in its latest announcement.
