London: The UK government on Tuesday joined a slew of nations in cracking down on misleading cryptocurrency ads to protect consumers.
The country has joined Spain, Singapore and India in an effort to reign in cryptocurrency advertisements that promise wild returns.
The UK Treasury published a consultation response, saying that proposed legislation will also provide the UK financial watchdog, the Financial Conduct Authority (FCA), powers to regulate the crypto market more effectively.
“Around 2.3 million people in the UK are now thought to own a crypto-asset with their popularity rising – but research suggests that understanding of what crypto actually is is declining, suggesting that some users may not fully understand what they are buying. This poses a risk that these products could be mis-sold,” the Treasury said in a statement.
The UK authority plans to bring crypto-assets within the scope of financial promotions legislation.
It means the “promotion of qualifying crypto-assets will be subject to FCA rules in line with the same high standards that other financial promotions such as stocks, shares, and insurance products are held to,” said the UK Exchequer.
“Cryptoassets can provide exciting new opportunities, offering people new ways to transact and invest – but it’s important that consumers are not being sold products with misleading claims,” said Rishi Sunak, Chancellor of the Exchequer.
“We are ensuring consumers are protected, while also supporting innovation of the crypto-asset market”.
The decision to bring these types of advertisements into the scope of regulation will mitigate the risks of consumer harm, ensuring people have the appropriate information to make informed investment decisions.
Spain earlier Singapore and India, stressing that the advertising of crypto-assets must be clear, balanced, fair and explain risks to the public.
Spain’s National Securities Market Commission issued new guidelines, to come into force from February 17, that mandates the following warning to be placed on all crypto ads: “Investments in crypto-assets are not regulated. They may not be appropriate for retail investors and the full amount invested may be lost”.
The aim, said the Spanish watchdog, is to ensure that the advertising of the products offers true, understandable and non-misleading content, and includes a prominent warning of the associated risks.
Earlier, Singapore warned cryptocurrency and digital token providers not to promote or advertise their digital tokens via various media platforms to the general public.
In new guidelines, the Monetary Authority of Singapore (MAS) said that digital payment token (DPT or more commonly known as cryptocurrency) service providers should not promote their DPT services to the general public in Singapore.
The Indian government in November last year raised concerns over crypto ads promising wild returns.
Indian crypto players bombarded the public with advertisements across platforms — doubling down on their marketing spend when the cryptocurrencies are yet to be accepted as legal tender and lack legal framework and regulatory norms in the country.
The much-awaited ‘Cryptocurrency and Regulation of Official Digital Currency Bill, 2021’, did not make it to the table during the Winter Session of Parliament amid growing concerns over the misuse of digital coins on the Dark Web for terror acts and drugs trafficking by militant organisations, and for money laundering and hawala-based transactions.