UK Watchdog, FCA, Sets Tougher Rules for Crypto Advertisers and Bans Referral Bonuses
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The Financial Conduct Authority (FCA) has announced new regulations that compel crypto advertisers in the UK to give first-time investors a “cooling-off period” and scrap referral bonus offerings.
Crypto Advertisers Face Tough New FCA Rules in the United Kingdom
The Financial Conduct Authority (FCA) in the UK has released a new set of rules that will regulate the marketing of crypto assets starting from October 8, 2023.
The FCA issued an official press release and a summary on Twitter on Thursday, June 8, stating that these rules will require crypto firms to ensure that new investors have adequate knowledge of the industry.
The FCA also emphasized the need for transparent risk warnings in advertisements and prohibited the promotion of misleading information.
Our new rules mean #crypto firms must ensure that people have the appropriate knowledge and experience to #invest.
Firms that promote #cryptoassets will need to include clear risk warnings and ensure adverts are clear, fair and not misleading. https://t.co/lzThyUU1Y1
— Financial Conduct Authority (@TheFCA) June 8, 2023
Additionally, starting from October 8, 2023, anyone marketing crypto assets to consumers in the UK must provide a “cooling-off” period for new investors.
The new rules also explicitly clarified that all refer-a-friend bonuses would be banned from October 8 as part of the new measures designed to safeguard newbie investors.
The FCA explained that the ban on referral bonuses would ensure that anyone buying crypto assets for the first time understands the risk involved without any inducement.
Sheldon Mills, the executive director of Consumers and Competition for FCA, emphasized the decision to buy crypto ultimately rests with the individual.
However, research shows that many people usually regret making hasty decisions.
Stressing further, Mills highlighted that the new FCA rules aim to provide individuals with sufficient time and clear risk warnings to make informed decisions about crypto.
Additionally, he disclosed that the FCA is working on giving additional guidance to help crypto firms meet the new expectations and regulations.
FCA’s New Tough Rules on UK Crypto Firms Clash With Recent SEC Crackdown on US Crypto Exchanges
Amidst the FCA rolling out new tough rules on Crypto adverts in the UK, a similar watchdog in the United States is also cracking down on two of the biggest U.S.-based crypto exchanges.
On June 5, the popular crypto exchange Binance.US announced on Twitter that the US Securities and Exchange Commission (SEC) filed civil claims against the company.
Binance.US said in the Tweet that the SEC lawsuit is another example of “regulation by enforcement” under the current SEC commission. The company also described the lawsuit as a “baseless” one.
Today, the SEC filed civil claims against https://t.co/AZwoBOgsqS in what is the latest example of regulation by enforcement under the current Commission. To be clear, we believe the lawsuit is baseless and we intend to defend ourselves vigorously. However, we want to address…
— Binance.US 🇺🇸 (@BinanceUS) June 5, 2023
On June 6, Bloomberg also published a report revealing that the largest U.S.-based crypto exchange, Coinbase, has been sued by the US Securities and Exchange Commission (SEC) for breaking US securities rules.
On the same day, the co-founder and CEO at Coinbase, Brian Armstrong, took to his verified Twitter page to confirm the SEC lawsuit against the company.
He stated in the long tweet that Coinbase would proudly represent the crypto industry in court by clarifying crypto rules.
Brian claimed that the SEC had initially reviewed Coinbase business before allowing the company to go public in 2021.
Regarding the SEC complaint against us today, we’re proud to represent the industry in court to finally get some clarity around crypto rules.
Remember:
1. The SEC reviewed our business and allowed us to become a public company in 2021.
2. There is no path to “come in and…— Brian Armstrong 🛡️ (@brian_armstrong) June 6, 2023
The recent introduction of stricter rules by FCA regarding crypto adverts and the SEC crackdown on US crypto exchanges conflict with Bybit’s announcement of their expansion to Kazakhstan.
Bybit is one of the largest crypto exchanges globally, although it is not accessible in certain areas such as the USA, Canada, mainland China, and Russian-controlled regions of Ukraine.
Bybit has officially gained the digital asset trading facility and custody license from AFSA Kazakhstan. With this license Bybit will grow our influence and impact in the CIS and nearby regions. pic.twitter.com/VEQrhJQC01
— Ben Zhou (@benbybit) June 7, 2023
Ben Zhou, the co-founder of Bybit, shared the news of their expansion to Kazakhstan on June 7 through a tweet featuring an image of the company’s new license approved by AFSA Kazakhstan.