The UK has clamped down on misleading crypto advertising. The decision has been officially announced by the UK Government, which intends to subject cryptocurrencies to the same laws as advertising for traditional financial products.
UK: crypto advertisements to be treated as financial products
The aim of the British government’s initiative is to protect consumers.
The government writes in an official press release that 2.3 million citizens in the UK have cryptocurrencies, but as their popularity grows, understanding of what they are decreases. This would indicate that many are unaware of what they are buying. This means they run the risk of making errors or misinterpreting when buying something.
The government therefore wants to take action, and will do so with legislation that equates cryptocurrency advertisements with financial promotions. As such, cryptocurrency businesses will have to comply with the FCA‘s strict rules, and match the standards imposed on financial promotions and insurance products.
This clampdown is intended to encourage financial innovation but prevent misleading products from being marketed and purchased.
UK and cryptocurrencies
Contrary to what one might think, the UK does not intend to curb the cryptocurrency business, as the government explicitly says it recognizes the potential. In particular, there is recognition of the potential of stablecoins for more efficient payments.
Indeed, cryptocurrencies are at the heart of the studies of the Cryptoasset Taskforce, a team that is researching crypto assets and helping the UK government to make decisions about them, especially with regard to the legislation to be applied.
Now all that remains to be done is to wait for Parliament to pass a specific law on the subject, which will amend the Financial Promotion Order, implementing the Financial Services and Markets Act of 2000. This law stipulates that anyone wishing to advertise financial products must be authorized by the FCA and follow binding rules.
Chancellor of the Exchequer, Rishi Sunak commented:
“Cryptoassets can provide exciting new opportunities, offering people new ways to transact and invest – but it’s important that consumers are not being sold products with misleading claims. We are ensuring consumers are protected, while also supporting innovation of the cryptoasset market”.