Her Majesty’s Treasury, the UK government’s economic and finance ministry, announced today that it is studying ways of creating regulatory legislation that would address the challenge of misleading advertisements and promotions in the crypto space.
According to the ministry, advertisements with content dealing with cryptocurrencies and crypto assets should be “brought into line with other financial advertising” in order to ensure that such materials are “fair and clear.” The ministry claims that the new rules set for legislation were set to increase consumer protection while also encouraging innovation.
Recent consumer research undertaken by the FCA showed that some 2.3 million people living in the UK likely own cryptoassets, but while this number is rising, the degree of understanding of what and how crypto actually functions is in decline. This led to the study’s insight which suggests that crypto users and investors do not have a full understanding of the risks that such digital assets carry, and as such may not have been served with appropriate information to decide on investments.
“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. We are ensuring consumers are protected, while also supporting innovation of the cryptoasset market.” says Rishi Sunak, Chancellor of the Exchequer.
The ministry’s decision to file for this legislation was based on a consultation response which it published today. The response will essentially categorize all advertorial and promotional materials for cryptoassets under the scope of financial promotions (which includes stocks, shares, and insurance products), subject to the same rules and limitations as prescribed by the Financial Conduct Authority (FCA).
The new rules will require amendments to the existing Financial Promotion Order, which describes and lists investments and activities to which the rule applies. The Prudential Regulation Authority (PRA), alongside the FCA, are tasked to oversee and authorize businesses that promote or create financial products. These regulatory bodies administer their implementations under the Financial Services and Markets Act of 2000.
According to the ministry’s initial assessments, a transitional period of approximately six months will ensue, with the finalization and publication of the proposed legislation aimed as a complementary measure to current FCA rules.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Source: https://cryptodaily.co.uk/2022/01/hm-treasury-proposes-new-legislation-on-misleading-crypto-ads