Free promotional crypto and NFT (non-fungible token) airdrops that promote investing will face a ban in the UK once the Financial Conduct Authority’s (FCA) new rules kick in. However, general crypto and NFT airdrops will still be allowed. The rules further state that there will be a ban on giving incentives for people to invest in such assets. The UK’s new rules will come into effect on Oct. 8 this year.
Under the new rules, cryptocurrencies will be under “restricted mass market investment.” Moreover, advertisements will need to have clear warnings about the risks.
According to Matthew Long, such free promotional airdrops “can be problematic later.” Long is the director of payments and digital assets at the FCA.
Respondents to the FCA’s marketing regulation consultation last year were mainly against ideas like prohibiting incentives. Other proposals that faced disagreements include classifying cryptocurrencies as investments for the general public and preventing new investors from receiving DOFPs (do-not-price-promote) offers.
Who can run crypto ads in the UK?
Organizations authorized by the FCA can approve their own ads. The government has created a temporary exemption that will enable crypto firms registered with the FCA to abide by its anti-money laundering requirements. This is because there is currently no system in place that enables the FCA to fully authorize crypto firms.
Long said that the FCA decided to create the “safest possible set of rules.” The agency decided to go ahead with its move despite industry pushback.
Will Charlesworth, a crypto assets partner at Keystone Law, said that the new changes “will potentially enhance consumer and market confidence in the digital assets sphere.”
Nonetheless, unlike the U.S. other European nations are beginning to enforce clear rules for the crypto industry. The U.S. is one of the few major economies that is yet to unveil its agenda for the budding industry. Many expect the U.S. to soon follow the European nations in creating clear regulations for the industry.