- The UK's Financial Conduct Authority (FCA) has denounced “refer a friend” crypto promotions.
- The FCA's Sarah Pritchard, executive director of markets, feels people are prone to crypto investing with such incentive schemes despite not knowing its risks.
- This comes just a day after Chancellor Rishi Sunak announced the FCA seeks to regulate crypto marketing.
The UK's Financial Conduct Authority (FCA) has denounced “refer a friend” crypto promotions, thereby calling for a tightening on crypto regulation. The regulator felt such incentive schemes often urged people to get into the world of digital currencies without understanding the risks they bring.
Therefore, it made it clear that it would like to ban all incentive schemes such as refer-a-friend bonuses or new joiner freebies in the future. The regulators on 19 January toughened their stance on financial advertising in lieu of the concerns of how easily people are prone to make such high-risk investments.
Ask FCA's Sarah Pritchard, executive director of markets, and she would tell you that the need for protecting investors is the main criteria of the regulator. Pritchard feels that with such incentive schemes, more people are prone to venturing into investment products of which they don't have a clear understanding and thereby are susceptible to misinformation or being misled by fancy schemes.
Also read: Is UK edging closer to crypto regulation?
Crypto advert crackdown
This, somewhat of a crackdown, comes just a day after Chancellor Rishi Sunak announced that the FCA seeks to regulate crypto marketing. The regulators, off late, have kept a strict vigil on how crypto ads are being portrayed and have penalized exchanges and firms.
Previously, the Advertising Standards Authority (ASA) had penalized Coinbase, Kraken, Crypto.com, Papa John's GB, etc., for flagrant disregard of crypto advertising rules by displaying misleading and irresponsible ads. But now, with crypto marketing coming under the FCA lens, the regulator could enforce accuracy and make sure adverts adequately warn about the associated risks.
Crypto regulations on the horizon?
These latest developments could signal UK's intention to impose crypto regulations soon. Recently, a dedicated committee or a panel was formed to oversee or draft a plan for crypto regulations.
The committee consists of members of Parliament and members of the House of Lords. Members of the committee hinted that the panel's main objective is to check financial crimes and consumer protection.
Lisa Cameron MP, chair of the Crypto and Digital Assets APPG, feels that with many individuals embracing blockchain technologies in multiple ways, there is a need for a proper rulebook for crypto and digital asset promotion. This is critical to ensure that consumers are well aware of what they are getting into and are pros and cons of it.
All in all, the latest move is a clear indication that crypto regulation in the UK is no more just a concept. Several wheels in motion are in place, and very soon, we could see influences.