The U.K. FCA – Financial Conduct Authority – policy document- mentions that investment in crypto assets should be limited, and consumers should get warned that they could lose all their money.
The Financial-services regulator stated, that there will be a ban on delivering bonuses to clients who refer friends. They also mention that they are preparing new laws that will expand its powers to cover digital assets including cryptocurrencies.
Back in April, then finance minister Rishi Sunak conveyed that he desired to make the country a crypto asset hub. But the latest market crash, which saw a fall in the price of bitcoin and the downfall of assets such as the terraUSD (UST) stablecoin and Three Arrows Capital fund, has caused the regulator only more relentless to act against what it sees as excessively risky behavior.
Sarah Pritchard, the FCA’s executive director of markets, said in a statement that FCA wants people to be able to invest with confidence, comprehend the risks involved, get the investments that are suitable for them, and reflect their appetite for risk.
She also conveys that when they see products being marketed that don’t contain the right risk warnings or are unclear, unfair, or misleading, they will act.
The FCA expressed that they still consider crypto assets when utilized as a speculative investment, to be high-risk, in spite of its absence of current powers to directly regulate the market.
Warning for Crypto Investors
Under the plans of FCA, potential crypto buyers must be given a clearer and more prominent warning that they could lose all their funds and won’t be protected if something goes sideways.
While the new regulations in principle apply only to risky non-crypto products, the FCA is waiting for lawmakers to pass promised legislation that would apply them to innovative digital assets.
The regulator has tentatively remarked that crypto would fall under an intermediate category of restricted mass-market investments. Marketing to retail investors wouldn’t be bounded, but there are more additional limits than would apply to assets considered safer, such as listed stocks.
The document noted that qualifying crypto assets are only likely to be suitable for consumers as a small part of a diversified portfolio, and should only be accessed when consumers understand the risks involved, adding that disclosure should be limited to 10% of net assets.
Read more about the new policy on the FCA website.
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