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- This move is allegedly an alternative to creating a new framework for such crypto products.
- Firms that sell regulated crypto-related investments might also have to seek the FCA’s approval.
- The FCA is reportedly weighing the potential ban of crypto-based derivatives in the country.
The UK government is suggesting to have the Financial Conduct Authority start overseeing the promotion of crypto assets. A report unveiled this news on July 20, noting that the government sees this move as an alternative to creating a new framework for such products. Reportedly, this move aims to improve investor protection.
According to the report, the economic secretary to the Treasury and City Minister, John Glen noted that even firms that sell regulated investments with an underlying crypto element may have to seek FCA authorization depending on their activities. By granting the FCA the power to regulate the promotion of certain types of crypto assets, the government believes it would be in a position to end false advertising easily.
“If adverts by unauthorized firms are misleading, or don’t fully outline the risks, then people can end up losing money. That’s why we want to put more protections in place around such financial promotions, including the promotion of crypto assets, while continuing to ensure people have access to a wide range of products on the market.”
Most Britons want to get rich swiftly
The City Minister further cited that the current regulation requires unauthorized firms to have their promotions approved by a regulated firm before they can promote a specific financial product. However, this system has failed to keep up with the increasing number of cryptocurrency products that are entering the market. As such, the minister suggests that even regulated firms need to seek the FCA’s consent before going ahead to promote crypto products.
This news comes after the SEC recently published the findings of independent complementary research, which found UK citizens that buy cryptocurrencies often seek ways to get rich quick. Out of the interviewed respondents, many perceived crypto as a shortcut to get easy money and wealth.
Per the FCA, crypto scammers in the UK have been increasingly using social media to promote their schemes. Most often than not, the fraudsters leverage celebrity endorsements and images of expensive cars and wristwatches to persuade their targets.
Banning the sale of crypto-based derivatives
Reportedly, the FCA is contemplating a potential ban on the sale of derivatives that are based on cryptocurrencies. Should the agency decide to proceed with this plan, it would be its first-ever major intervention in the crypto market. By enforcing this ban, the FCA would prohibit the sale of derivatives such as CFDs, options, and futures to retail investors.