New rules from the FCA mean first-time crypto investors will have to be offered a ‘cooling-off’ period, ‘refer a friend’ bonuses will be banned, and advertisements must have clear risk warnings.
New FCA Rules
As of 8th October 2023, those marketing cryptoassets to UK consumers will be obliged to offer a 24-hour cooling-off period. This means that new crypto investors will have to wait 24 hours before they can complete their transaction- if they change their mind, they can get their money back.
Sheldon Mills, Executive Director, Consumers and Competition at the FCA, has 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”
Under these new measures introduced in October, ‘refer a friend’ bonuses will also be banned, and those advertising crypto will have to include clear risk warnings and ensure their adverts are clear, fair, and not misleading.
FSCS Consumer Research: Attitudes Towards Investing in Cryptocurrencies
According to FSCS research:
- 91% of consumers with savings or investments say they’ve heard of cryptocurrencies, yet only 11% have a good understanding of how they work… to find out more about what cryptocurrency is and how it all works, we have a blog just for you
- 80% of those with experience or open to investing cite reasons that can be grouped as being ‘swayed by the hype’ as a motivation to invest. In fact, 35% of all current, former or potential investors say friends and families encouraged them to invest… therefore, it’s significant that the FCA are banning these refer a friend bonuses, as some will invest in crypto just because those they know are trying to get them to
- 52% with experience or open to investing agree that they see crypto ads everywhere… given that these ads are so rampant, it’s more important than ever to ensure that any false or misleading advertising is cut out
- 23% would consider getting into debt to buy cryptocurrencies, increasing to 34% among under 25s and 29% of those with household incomes of less than £15,000… it could even be argued that part of the reason why people in debt are willing to buy cryptocurrencies is because it is advertised as a way to ‘get rich quick’. It can be easy to be misled into believing that crypto could be a way to get out of debt, but unfortunately, for many, it actually does the opposite due to its risky and unregulated nature