The UK government has revealed that it plans to update its laws in order “to bring the promotion of cryptoassets within the scope of financial promotions legislation.” That will ensure any crypto promotion will be held to the same standards as promotion for stocks, shares and insurance products. It also has fall in line with the rules set by the Financial Conduct Authority (FCA).
Governments have recently started cracking down on crypto ads in an effort to protect consumers from scams they may not be familiar with. The Spanish government is currently establishing rules on how influencers and their sponsors promote cryptocurrencies. Meanwhile, Singapore’s authorities asked crypto companies outright not to market their services to the public. One type of scam is the “pump and dump,” in which fraudsters find ways to artificially inflate the value of a cryptocurrency and to get people to invest money in it. They then unload their shares while the value is high to make a lot of money, thereby lowering the coin’s value in the process.
According to the UK government, approximately 2.3 million people in the country are now thought to own a cryptoasset. While cryptoassets’ popularity is rising, the FCA’s research suggests (PDF) that potential investors’ level of understanding about them is on the decline. That means people may not be fully aware of the risks involved when it comes to investing in them, which further supports “the case for regulatory intervention to ensure that cryptoasset promotions are fair, clear, and not misleading. “
