Britain is cracking down on crypto advertisements. The Financial Conduct Authority (FCA) said they would be limiting marketing for high-risk crypto investments. The move came after a boom in crypto advertisement and endorsement from celebrities. It’s to protect investors not aware of the high risks involved with these investments.
FCA is tightening up on financial advertisements to ensure that consumers are protected. The changes will introduce Britain’s consumer body “to strengthen risk warnings and ban investment incentives such as bonuses for a new joiner.”
Experts believe these advertisements can confuse people into thinking they’re safe when they could just end up losing their money if something goes wrong with investing skills.
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In light of recent events like the coronavirus pandemic in 2020 and cyber attacks on financial institutions, many countries have regulated consumer investments. For example, England rejected Five out of ten investment firms’ applications alone.
The FCA issued a warning about high-risk investments. They are concerned that many people are accessing these without understanding the risks involved. The action could lead them into debt or financial ruin if something goes wrong.
Celebrities Invovlement
The FCA warns of the risks associated with digital currencies, as interest in this new financial innovation has grown dramatically. Many celebrities started promoting crypto companies online without caring for their safety or others. Some even got into trouble due to what they said on social media.
Kim Kardashian and Floyd Mayweather Jr., two of America’s most famous people, are currently facing a lawsuit in the US for improperly promoting a cryptocurrency token.
The Spanish market regulator scolded Iniesta, a soccer star, for promoting Binance on his social media accounts. He has since shut down all crypto-related material and moved to regulate advertising.
Matt Damon has been one of the most prominent figures spreading awareness about emerging tech and its benefits. He recently appeared on TV to promote Crypto.com, a digital asset platform that helps users secure their cryptocurrency investments.
Crypto Investment Ads New Guideline
London has seen a boom in crypto trading, with many ads plastered over the U.K.’s capital city. However, the Advertising Standards Authority has fiercely criticized that.
As a result, the Advertising Standards Authority forbade seven ads in December. Instead, the ads displayed cryptocurrency comparisons to boost trading. They hope this will create new guidelines on advertising with cryptocurrencies.
The Financial Conduct Authority announced that they are ready to make several changes in response to consumer concerns. The concerns are the ease and speed with which people can invest money.
In line with its published Consumer Investment Strategy last year, FCA says these adjustments will protect consumers from taking advantage of when looking for high-risk investments without adequate information or protection against potential losses.
The UK’s finance ministry has announced that they plan on bringing promotions of cryptoassets under their remit for the first time, following consultation with public input.
The UK authority plans to categorize some cryptoassets as “restricted mass-market investments.” As a result, only consumers will be able to afford them if they fall into high net worth or sophisticated investors.
The Financial Conduct Authority has said that companies issuing crypto promotions must follow transparent and fair rules. The FCA requires firms to be upfront with their customers, not misleading them in any way possible about the benefits they offer.
The FCA has announced that they plan on setting out final rules this summer. The new policy is part of an effort by UK authorities to buttress protections offered on consumers, including proposed duties from firms themselves.
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