The UK government will impose stricter regulations on advertising and promotions for cryptocurrencies that pose a potential risk to investors who are unaware of the risks associated with cryptocurrencies.
The UK government has announced its intention to strengthen supervision of „misleading and inappropriate advertising“ that potentially puts retail investors at risk.
The proposals, which were published on the national government’s website on Monday 20 July, require all crypto companies to undergo a regulatory gateway before they can advertise their products. It provides that the Financial Conduct Authority (FCA) will be established as the body responsible for overseeing all promotions of digital assets.
Should the proposals come into force, all authorised crypto-companies will have to comply with these new regulations.
These measures follow a 2018 report by the government’s Crypto Assets Task Force, which revealed that misleading promotions and advertisements for crypto products are a major problem for investor protection.
John Glen, Secretary of Commerce at the Treasury Department and City Councilor for the City, believes that current regulations are not sufficient to cover the growing number of products being placed on the market.
„If the advertising by unauthorised companies is misleading or fails to fully disclose the risks, people can end up losing money. That’s why we want to put more protection around such financial actions, including advertising cryptocurrencies, while continuing to ensure that people have access to a wide range of products on the market,“ he said.
Glen added that the proposals would raise the advertising of crypto products to the same level as other asset classes.
The proposal is currently under discussion until 25 October. Last month, the FCA published a report entitled Crypto Asset Consumer Research 2020, which concluded that there was a „statistically significant increase from approximately 1.5 million people who owned or hold cryptocurrencies to 2.6 million people“.
The study estimates that 5.35% of the general population owned or held cryptocurrencies, a significant increase from the 3% who responded in the previous survey, which was conducted face-to-face with a smaller sample.
In addition, the number of people who had never heard of cryptocurrencies dropped from 58% to 27%. The report notes that this is an „increase in the percentage of those who have heard of cryptocurrencies from 42% to 73% of adults.
Respondents cited Bitcoin as their most popular cryptocurrencies, followed by Bitcoin Cash, Ethereum, Bitcoin SV and Litecoin. The majority of respondents (77%) bought their cryptocurrencies through online exchanges, with the top five exchanges of choice being Coinbase, Binance, Kraken, Bittrex and Bitfinex.