UK government plans to place cryptocurrency promotions under FCA’s oversight
The U.K. government wants increased oversight on cryptocurrency promotions and proposed to have the FCA handle the matter.
Thu, 23 Jul 2020, 05:09 am UTC
The U.K. government is looking for ways to protect the interest of cryptocurrency investors. One of the proposals being put forth is to increase oversight on digital asset promotions by placing them under the jurisdiction of the Financial Conduct Authority (FCA).
Her Majesty’s Treasury recently revealed a plan to restrict cryptocurrency promotions to protect the interest of retail crypto investors, according to the DailyHodl. Also referred to as the Exchequer, HM Treasury is the UK government’s economic and finance ministry responsible for developing and executing the government's public finance policy and economic policy.
The U.K. government is targeting crypto promotions as they are often misleading. “Adverts often overstate benefits and rarely warn of volatility risks, the fact consumers can both grow and lose their investment, and the lack of regulation,” HM Ministry stated. “There are also examples of regulated firms marketing crypto asset products without clarifying that this part of their business is not regulated.”
The result of a recent study by the UK’s Financial Conduct Authority (FCA) highlights the need for regulatory frameworks in the cryptocurrency industry as not every investor is aware of the risks involved. “A minority (11%) of current and past crypto-asset owners incorrectly believed that their holdings received regulatory protections,” the FCA research noted. “Though a minority, extrapolation from the representative sample suggests this figure represents c. 300,000 people.”
With misleading crypto advertising thrown into the mix, it is possible for crypto investors to lose money. “If adverts by unauthorised firms are misleading, or don’t fully outline the risks, then people can end up losing money,” John Glen, the economic secretary to the Treasury and City Minister, explained, FinanceMagnates reported. “That’s why we want to put more protections in place around such financial promotions, including the promotion of cryptoassets, while continuing to ensure people have access to a wide range of products on the market.”
The U.K. government proposed to let the FCA handle the oversight of cryptocurrency promotions as it’s a task fit for the financial regulator. FCA is aware that crypto scammers have been using the social to promote their schemes by using fake celebrity endorsements to persuade their targets.
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