Peer-to-peer industry stakeholders believe that the sector’s recent financial promotion rules were a “dry run” for the newly-announced crypto asset marketing restrictions.
One P2P stakeholder, who asked to remain anonymous, said that the financial promotion rules introduced for the P2P and crowdfunding sector were “100 per cent a dry run” for the new crypto marketing regulations.
The new regulations for crypto assets were announced today (8 June) and require all crypto firms to introduce a cooling off period for first-time investors, mirroring the recent financial promotion rules for high-risk investments, which covers the P2P lending sector.
The new crypto regulations also ban ‘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.
“All this is going to do is drive this product to the mass affluent, offshore investors,” one P2P stakeholder said.
“It is an ill-informed judgement.”
A representative from the UK Crowdfunding Association (UKCFA) agreed, saying that “this has always been the plan”.
“In a way the risk of crypto was driving the development of elements which we feel in aggregate go further than the original objectives of this change,” the UKCFA spokesperson said.
“In other words, the fear of potential (and actual) customer detriment related to crypto has pushed P2P and crowdfunding into a regulatory regime which is now the toughest in the world.
“Whatever your opinion of crypto investments, the UKCFA feels strongly that there needs to a review of the impact of these rules on a sector which is very different – both in terms of regulatory status and risk to investors.”
The new crypto marketing rules will be implemented 8 October 2023.