The British government has revealed its plan to better regulate the promotion of cryptocurrencies. This announcement follows similar measures undertaken by other countries around the world.
Risks for uninformed users
” It is estimated that around 2.3 million people in the UK now own crypto-assets, which are growing in popularity. However, research indicates that understanding of what cryptocurrency really is is declining, suggesting that some users do not fully understand what they are buying. There is therefore a risk that these products will be sold wrongly “explains the Treasury Department in his press release.
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The authorities are particularly concerned about a type of scam called ” pump and dump “. This consists of artificially increasing the value of a cryptocurrency so that people invest in it. In 2021, many advertisements promoting cryptocurrencies were posted in the London Underground. If the Advertising Standards Authority, the self-regulatory body of the advertising industry in the United Kingdom, has cracked down on several occasions by banning several advertisements, in particular for Coinbase, the government now wants to be able to verify advertisements before they are broadcast in order to avoid any drift.
The objective of the authorities is therefore to protect consumers through regulation, without preventing the booming cryptocurrency market from evolving. ” Cryptocurrencies can provide exciting new opportunities, giving people new ways to transact and invest – but it’s important that consumers aren’t being sold products with misleading claims. We ensure consumers are protected, while supporting innovation in the crypto-asset market says Rishi Sunak, Chancellor of the Exchequer (head of the Treasury Department).
The promotion of cryptocurrencies now under the aegis of the Financial Conduct Authority
From now on, the government wants to “bring the promotion of crypto-assets within the scope of the legislation on financial promotions”. This means that it will be subject to the same rules as advertisements for shares, units or insurance products; everything will be supervised by the Financial Conduct Authority (FCA), which is responsible for regulating the British financial sector.
“Under the Financial Services and Markets Act 2000, a company can only promote a financial product if it is authorized by the FCA or the PRA (note: the Prudential Regulation Authority), or if the content of the promotion is endorsed by a company that is. Companies wishing to promote such investments and activities must comply with binding rules that financial promotions must be fair, clear and not misleading”.
The FCA will soon communicate on the specific rules it will establish regarding the promotion of cryptocurrencies.
The British government is acting on the resurgence of advertisements promoting cryptocurrencies. Photography: Deniz Fuchidzhiev / Unsplash
Cryptocurrencies are increasingly popular, and logically require greater regulation
The move follows Spain earlier this week, which announced that influencers with more than 100,000 followers would be required to have their cryptocurrency ads vetted by authorities, as well as inserting a message. of warning. In Singapore, lawmakers are going further and seeking to ban the promotion of crypto-assets. Many measures aimed at better regulating the sector are also being prepared in the United States. On the French side, the authorities are quite silent on this subject, although Nabilla was recently fined $20,000 for promoting the merits of Bitcoin in 2018.
In 2020 and especially in 2021, the use of cryptocurrencies has exploded around the world, so much so that more and more companies are accepting them as a means of payment. As a result, their promotion is much more important and now reaches a sometimes uninformed public, which can lead to many scams. It therefore seems logical that more and more governments are taking the decision to regulate the advertising of cryptocurrencies: in addition to avoiding deception, this allows players in the sector to develop in a healthier climate.