Following an FCA Crackdown, Cryptocurrency Investors to Wait 24 Hours Before Completing Their Transactions in the UK
The Financial Conduct Authority (FCA) crackdown forces new crypto investors in the UK to wait 24 hours before proceeding with transactions. The FCA will enforce compliance with revised FCA rules from October.
There has been a surge in cryptocurrencies popularity in the UK, such as Bitcoin. The government estimates that one in 10 British adults invests in digital assets. Compared to gambling, crypto is a high-risk asset and needs more regulation. Crypto companies will be required to follow new FCA rules starting in October, affecting how they market themselves to UK consumers.
Following government legislation, the FCA will implement revised measures to regulate crypto promotion. Crypto companies must offer a 24-hour “cooling-off” period to new customers beginning October 08, 2023. You must wait a full day before your first cryptocurrency transaction is completed if you are investing in crypto for the first time.
By doing so, investors will be prevented from making rash investment decisions. Companies that sell cryptocurrencies to UK investors are subject to the new legislation. It is expected that the FCA will enforce a ban on advertising that offers “refer a friend” bonuses. The law urges companies to ensure cryptocurrency advertisements are “clear, fair, and not misleading.”
Companies should warn about crypto investment risks. FCA risk warning: “Don’t invest unless you are prepared to lose your entire investment. This is a high-risk investment, and you should not expect to be protected if something goes wrong.”
The revised advertising rules will not affect non-fungible tokens. However, they cannot be used as incentives for cryptocurrency investing. FCA officials have warned crypto company bosses that they may be jailed for up to two years or fined.
Cryptocurrencies are largely unregulated as investments and considered high-risk investments. The FCA does not govern cryptocurrency investments. Cryptocurrency exchange platforms are regulated in the UK to prevent illicit funds transfers. Also, the FCA regulates cryptocurrency promotion for UK investors. The FCA regulates crypto investment marketing with the Advertising Standards Agency (ASA). A committee of MPs stated last month that cryptocurrencies “more closely resemble gambling than a financial service.”
Johanna Noble, editor of the Times Money Mentor, wrote a column on “Why young people are addicted to cryptocurrencies?”. Since then, various legislative changes have been made to protect potential investors from cryptocurrency risks. Cryptocurrencies will be marketed and sold differently due to this change. According to the FCA, crypto investors regret making hasty decisions when they invest in digital assets.
Sheldon Mills, director of the FCA’s consumer and competitions division, said: “It is up to people to decide whether they buy crypto. But research shows many regrets making a hasty decision. Our rules give people the time and the right risk warnings to make an informed choice,” continued, “Consumers should still be aware that crypto remains largely unregulated and high risk. Those who invest should be prepared to lose all their money,” she further added. “The crypto industry needs to prepare now for this significant change. We are working on additional guidance to help them meet our expectations.” Currently, the FCA guides how firms can advertise cryptocurrency to UK consumers more effectively.
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