LONDON () – The UK’s financial watchdog said on Wednesday it plans to impose restrictions on the marketing of cryptocurrencies and other high-risk investments such as crowdfunding and retail mini-bonds.
The Financial Conduct Authority (FCA) notes that the changes will increase risk warnings in advertising and prohibit incentives to invest, such as bonuses to invite new members or friends.
The increase in investment fraud since the onset of the coronavirus pandemic in 2020 has prompted regulators to take action, such as refusing every fifth license application from consumer investment firms in the year ending March 2021.
“We are concerned that many consumers are simply‘ clicking ’and entering into high-risk investments without realizing the risks,” the FCA said.
The planned rules cover cryptocurrencies, including cryptocurrencies such as Bitcoin, as well as high-risk investments such as crowdfunding, peer-to-peer agreements, mini-bonds and speculative non-liquid securities.
The draft rules, which have been put up for public discussion, will also, for the first time since the Ministry of Finance announced on Tuesday, prepare a basis for advertising under the authority of a cryptocurrency regulator.
“When this happens, the FCA plans to classify qualified cryptocurrencies as‘ Limited Mass Market Investments ’, meaning that consumers will only respond to financial promotions for cryptocurrencies if they are classified as limited, high net worth or complex investors,” the FCA said. statement.
“Firms issuing such shares must comply with FCA regulations, such as the requirement of clarity, fairness and non-interference.”
Under the proposed rules, firms that approve and publish promotions should have appropriate experience and understanding of the proposed investment, the observer said.
“People who want to make high-risk investments are also asked more specific questions about their knowledge and investment experience once it is discovered that many consumers are investing unaware of the risks,” he added.
The FCA sets the final rules in the summer.
Recovery is part of the FCA’s broader consumer protection strategy, including the proposed consumer commitment for firms.
Hugh Jones’s interview, edited by Iain Withers and Mark Potter