UK Regulator’s New Crypto Rules Include ‘Cooling-off Period’ for Investors
Lansdown, labeled the cooling-off period one of the more significant requirements.
In particular, she noted, it helps novice users of exchanges who might get “cold feet” when it comes to crypto investments.
“This may help reduce the pile-on effect with some coins surging to eye-watering levels spurred on by frantic purchases driven by the [fear of missing out] effect,” Streeter added. “The FCA is clearly worried that far too many consumers are gambling away their money, desperate to catch a ride upwards, no matter how risky the journey is.”
More crypto holders to protect
The new rules come as the number of crypto holders in the UK more than doubled in a one-year span, according to FCA survey findings published Wednesday.
Conducted in August 2022, the survey gathered responses from more than 2,000 people in the country. UK adults holding crypto assets numbered roughly 5 million at the time, according to FCA findings — up from 2.3 million in 2021.
The most common reason for purchasing crypto assets — as reported by 40% of respondents — remains “as a gamble,” according to the FCA findings. Roughly 30% of those surveyed said they regretted purchasing cryptoassets.
In terms of crypto promotion, 36% of adults have digested crypto-related advertisements. Eighteen percent of crypto users reported being influenced to purchase such assets because of advertising.
The FCA regulations also follow the SEC’s crackdown on crypto exchanges in the US. The securities regulator brought lawsuits against crypto exchanges Binance and Coinbase on Monday and Tuesday, respectively, for allegedly operating unauthorized exchanges and other securities violations —
The exchanges have denied wrongdoing.
Binance.US said in a tweet that the SEC filing is “unjustified by the facts, by the law, or by the Commission’s own precedent.” Coinbase Chief Legal Officer Paul Grewal said Tuesday that the SEC’s enforcement-only approach in the absence of clear crypto guidelines hurts companies like Coinbase “that have a demonstrated commitment to compliance.”
“It’s clear the FCA recognizes the damage that can be done to overall investor confidence when such high-risk investments are bought by people who seem woefully unaware of the risks,” Streeter said. “However, it knows it’s also walking a tricky tightrope.”
She added: “It recognizes these beefed-up safeguards are needed to ensure consumers are more protected from another FTX style implosion, but at the same time it doesn’t want to quash innovation in the digital coin and blockchain space.”
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