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UK issues stricter control on crypto advertisements

Relevance up to 06:00 2022-01-20 UTC+00

Cryptocurrency billboards appearing on the London Underground system will face tighter scrutiny as part of a series of steps taken by the government to stamp out false advertising in the industry.

The Treasury said on Thursday that it plans to regulate crypto advertising like other financial products to ensure that promotions are fair, clear and not misleading.

The news came a day after Spain made a similar announcement. Its market regulator said they must warn investors that they risk losing all their money.

The UK Treasury explained that recent studies showed that knowledge and clear understanding of crypto is declining, so there is a need for regulation as some users “may not fully understand what they are buying.”

Stricter rules will be carried out after they are finalized.

Cryptocurrency has attracted the attention of regulators around the world due to the volatile price dynamics of digital assets, as well as the complexity of products and the lack of consumer protection. In the UK, the Advertising Standards Authority has issued a series of rulings against crypto-related advertising, setting a consistent line against some of the key names in the industry. The UK Financial Conduct Authority also repeatedly warned of the risks associated with cryptocurrencies, saying that investors should be prepared to lose all their money.

In June, the FCA published a study that found that people convinced by ads were much more likely to regret their purchases. Spokesman Toby King said: “Bringing the regulation of ads for such products in line with other financial products will provide more certainty and bolster protections for consumers. The advertising authority will continue to clamp down on misleading or irresponsible crypto asset ads that fall within our remit and will work closely with the FCA to continue protecting consumers in the long term.”

The FCA has already banned the sale of crypto derivatives to retail customers, while acknowledging that it does not regulate the underlying cryptocurrencies. Cryptocurrency firms must comply with FCA anti-money laundering standards.

Walid Koudmani, a market analyst at XBT, said these new laws “may be a clear indication that the U.K. government intends to regulate a market that appears to be unstoppable and inevitable due to increased mass adoption. This could not only protect the current participants in this market, but it could ultimately encourage new investors to join as it would eliminate one of the main barriers to entry that some encounter, lack of regulation.”

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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