The UK government is clamping down on “misleading” cryptoasset adverts, bringing them in line with the rules for other financial advertising such as stocks and shares.
The Treasury announced its plan on Tuesday 18 January to bring the promotion of cryptoassets within the scope of financial promotions legislation.
Cryptoassets have soared in popularity in recent years, attracting 2.3 million UK investors according to the Treasury, but there are concerns that users may not fully understand what they are buying.
Cryptoassets do not currently fall under the remit of the Financial Conduct Authority (FCA), but the City watchdog will now be provided with more powers to regulate the market more effectively.
“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,” said Chancellor Rishi Sunak (pictured).
“We are ensuring consumers are protected, while also supporting innovation of the cryptoasset market.”
The government is planning to amend the Financial Promotion Order to incorporate cryptoassets. This will mean that firms wishing to promote cryptoassets must comply with binding rules that ensure their promotions are fair, clear, and not misleading.
The FCA will shortly be consulting on their proposed financial promotions rules that will apply to cryptoassets.
Today’s announcement complements broader proposals set out in the government’s consultation on a regulatory framework for stablecoins last year, with next steps due to be announced in due course.
The City regulator expects to publish a policy statement on strengthening financial promotion rules for high-risk investments, including peer-to-peer lending, in the second quarter of this year.