The Treasury outlined plans yesterday to legislate to address misleading cryptoasset promotions.
Adverts will be brought into line with other financial advertising, ensuring they are fair and clear, with the new rules designed to increase consumer protection.
“This is the day promoters of cryptoassets have known was coming for a long time, commented Adam Soilleux, Senior Manager, Financial Services Advisory at auditing giant BDO.
“Cryptocurrencies had fallen outside the regime for promoting traditional financial investments and given how widely cryptos are now being promoted, it’s important investors have adequate protection from harm,” he said.
Soilleux said: “A lot of people have long believed it was vital to tighten up the promotion of cryptocurrencies, particularly on social media. The FCA has been clear this has led to consumer harm for retail investors, who don’t necessarily understand the risks of these investments.”
“Retail investors see the rising prices and want to ride the wave, but don’t necessarily understand the risks on the downside.”Adam Soilleux, BDO
“These changes, including other changes being consulted on by the Treasury, will hit providers of cryptoassets with a whole range of new costs as the new requirements seek to ensure the appropriateness of investors investing in these assets.”
“They will need to make significant new investment in upgrading their compliance systems to ensure that financial promotions disseminated to potential investors in respect of cryptoassets comply with the regulatory requirements and are clear, fair and not misleading, Soilleux concluded.