The new FCA crypto marketing rules look very familiar
New crypto asset marketing regulations have been unveiled by the Financial Conduct Authority (FCA), and peer-to-peer lending stakeholders have spotted some striking similarities.
From 8 October 2023, businesses marketing crypto assets to UK consumers will need to introduce a cooling-off period for first time investors, the FCA has announced. The regulator has also banned ‘refer a friend’ bonuses and all crypto firms are now required to put in place clear risk warnings on their websites, and to ensure that adverts are clear, fair and not misleading.
Since the start of 2023, all P2P platforms and other high-risk investment firms have been required to follow these same guidelines.
Earlier this month, Peer2Peer Finance News revealed that representatives from the P2P lending community have been in secret talks with government officials and regulators about rolling back some of these financial promotion rules, claiming that they are having a negative impact on their business by discouraging would-be investors.
A key point of contention in these meetings is involves the 24-hour cooling off period. This begins when the consumer requests to view a direct offer financial promotion.
Platform leaders claim that this 24-hour cooling off period goes too far and is actively discouraging people from investing in P2P loans, even where P2P lending would be a good fit for them.
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The FCA has acknowledged the similarities between the new crypto rules and the existing P2P marketing restrictions, saying that “the approach taken to the promotion of crypto is consistent with the rules introduced by the FCA last year to tackle misleading financial advertisements of high-risk investments.”
The FCA is also consulting on additional guidance setting out expectations of firms advertising crypto to UK consumers. Those wishing to have their say will have until 10 August to respond.
“It is up to people to decide whether they buy crypto,” said Sheldon Mills, executive director of consumers and competition at the FCA.
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“But research shows many regret making a hasty decision. Our rules give people the time and the right risk warnings to make an informed choice.
“Consumers should still be aware that crypto remains largely unregulated and high risk. Those who invest should be prepared to lose all their money.
“The crypto industry needs to prepare now for this significant change. We are working on additional guidance to help them meet our expectations.”
Recent research from the FCA found that estimated crypto ownership more than doubled from 2021 to 2022, with 10 per cent of the 2,000 people surveyed stating that they own crypto.
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