The United Kingdom financial watchdogs(UK FCA) have been keeping an eye on the crypto products in the country and the way they have been marketed in the country. Owing to issues with the marketing techniques by some of the crypto businesses, the Financial Conduct Authority [FCA] is now looking to strengthen its rules for marketing high-risk products including crypto.
As per the draft issued on Wednesday, the regulators were proposing restrictions on the marketing of certain crypto assets. Given the vast number of cryptocurrencies in the market, people do not know about all the tokens. The FCA’s draft rule looks to ban firms from promoting such crypto products to users without assessing their financial knowledge and experience.
The FCA noted,
“We only want consumers to access [cryptoassets] knowingly, and after they have been assessed as having sufficient knowledge and experience to understand the risks involved. We are therefore proposing to apply the same financial promotion rules to crypto-assets as we are proposing to apply to other high-risk investments.”
These were categorized as ‘Restricted Mass Market Investments’ and can be mass-marketed only after complying with certain conditions.
They include categorizing the recipient of a crypto promotion as either a certified high-net-worth investor, a certified sophisticated investor, a self-certified sophisticated investor, or a certified “restricted” investor. Next on the list was consumers’ investment knowledge and experience.
As the FCA called it a consultation paper, it will await feedback on the draft rules until 23rd March. Following which it will provide the final rules by the summer of 2022.
Currently, the FCA has a definition for crypto assets, but it did not include non-fungible tokens [NFTs]. As the crypto space expands with different products, the authorities would have to make sure all its bases are covered before citizens could access them.
Many other countries have also been drafting stricter rules for the marketing of crypto and related products but as mentioned earlier, the space expanding is not just about cryptos anymore.