The latest from the FCA points the way on crypto insurance too. The explanation of risk, what is and what is not covered, geo territories excluded etc. will most likely need to be very plain indeed. In addition insurance brands will probably be expected to ONLY deal with FCA registered and compliant cryptoasset or coin sellers.
Those marketing cryptoassets to UK consumers will need to introduce a cooling-off period for first time investors from 8 October 2023, under new advertising rules announced today by the Financial Conduct Authority (FCA). As part of a package of measures designed to ensure those who buy crypto understand the risk, ‘refer a friend’ bonuses will also be banned.
The new rules mean crypto firms must ensure that people have the appropriate knowledge and experience to invest in crypto. Those promoting crypto must also put in place clear risk warnings and ensure adverts are clear, fair and not misleading. The FCA’s rules follow government legislation to bring crypto promotions into the regulator’s remit.
Sheldon Mills, Executive Director, Consumers and Competition, said:
“It is up to people to decide whether they buy crypto. But research shows many regret making a hasty decision. Our rules give people the time and the right risk warnings to make an informed choice. Consumers should still be aware that crypto remains largely unregulated and high risk. Those who invest should be prepared to lose all their money.
“The crypto industry needs to prepare now for this significant change. We are working on additional guidance to help them meet our expectations.”
The new rules come into effect as research from the FCA shows that estimated crypto ownership has more than doubled from 2021 to 2022, with 10% of the 2,000 people surveyed stating that they own crypto.
The approach taken to the promotion of crypto is consistent with the rules introduced by the FCA last year to tackle misleading financial advertisements of high-risk investments. It also supports the FCA’s three core commitments laid out in the 2023/24 business plan to reduce and prevent serious harm, set and test higher standards and promote competition and positive change.
The FCA is also consulting on additional guidance setting out expectations of firms advertising crypto to UK consumers. Those wishing to have their say will have until 10 August to respond.