Britain’s financial watchdog said on Wednesday it planned to curb the marketing of cryptoassets and other high-ris
k investments, a move that comes amid a boom in crypto ads and endorsements from celebrities.
The changes would strengthen risk warnings on ads and ban incentives to invest, such as new joiner or refer-a-fri
end bonuses, the Financial Conduct Authority (FCA) said.
A surge in investment scams, particularly online and via social media since the coronavirus pandemic beg
an in 2020, has prompted the regulator to take action, such as refu
sing one in five license applications from consumer investment firms in the year ended March 2021.
“We are concerned that too many consumers are just ‘clicking through’ and accessing high-risk investments witho
ut understanding the risks involved,” the FCA said.
The planned rules cover high-risk investments such as cryptoassets,
including cryptocurrencies such as bitcoin, as well as crowdfunding, peer-to-peer agreements, mini-bonds and speculative illiquid securities.
The FCA move comes as interest in digital currencies has surged. Across the world, a growing number
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of celebrities have promoted crypto companies online, with some getting into trouble as a result.
Reality TV star Kim Kardashian and boxer Floyd Mayweather Jr.
are currently facing a U.S. lawsuit alleging the celebrities misled investors in their promotion of a cryptocurrency token.
The Spanish market regulator, meanwhile, scolded soccer sta
r Andres Iniesta in November after he promoted cryptocurrency exchange platform Binance on his Twitter and Instagram accounts.
Spain moved this week to regulate crypto advertising, including by social media influencers.
Among other prominent figures to promote the emerging tech are the actor Matt Damon, who has fronted a campaign to promote digital asset platform Crypto.com.
‘Clear, Fair and Not Misleading’
The draft rules, put out to public consultation, also prepare the ground for Britain to bring promotions of
cryptoassets under the watchdog’s remit for the first time, following a finance ministry announcement on Tuesday.
The watchdog plans to categorize some cryptoassets as “restricted mass market investment
s,” meaning consumers can only respond to promotions if they are classed as restricted, high net worth or sophisticated investors.
“Firms issuing such promotions would have to adhere to FCA rules
, such as the requirement to be clear, fair and not misleading,” it said in a statement.