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The British government is introducing new legislation to protect consumers from misleading cryptocurrency advertisements, according to a recent announcement on the government website.
It’s thought that around 2.3 million Britons, or 3.4% of the UK population, now own cryptocurrencies; some sources place the number as high as 3.3 million, or 5% of the population.
However, the government’s announcement points to research that “suggests that understanding of what crypto actually is is declining.”
This likely refers to a previous study by the UK’s Financial Conduct Authority (FCA) in which 71% of the 2,568 respondents who’d heard of crypto were able to identify its definition correctly.
So what’s being done to improve consumer understanding of cryptocurrencies? Well, the British government hopes to bring all crypto-related advertising in line with financial promotions legislation in a bid to “increase consumer protection while encouraging innovation.”
This means that crypto ads will need approval by the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA), or a firm licensed by either of those.
First, the government intends to introduce secondary legislation to amend the Financial Promotion Order so that cryptocurrencies fall within its remit. Then there will be a transition period of “approximately six months” while advertisers bring themselves in line with FCA standards.
The complete response of the government’s consultation on policy proposals is freely available as a pdf here.
In a statement accompanying the announcement, Chancellor of the Exchequer Rishi Sunak said: “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.”
Crypto’s ad crackdown
It’s not just the British government clamping down on potentially misleading crypto advertisements. This month, the UK’s independent advertising watchdog, the Advertising Standards Authority (ASA), banned two Crypto.com adverts after concluding they were misleading.
In other countries, responses have been tougher.
This week, Singapore’s financial services regulator, the Monetary Authority of Singapore (MAS) told crypto companies to stop advertising to the general public.
On the same day, Spain’s National Securities Market Commission (CNMV) said it would impose fines of up to $300,000 if crypto companies, advertisers, and influencers fail to comply with new rules aimed at providing Spanish consumers with greater protection, transparency, and accountability.