Financial Conduct Authority gets tough on cryptocurrency adverts

Misleading cryptocurrency adverts finally face a crackdown after the watchdog revealed plans to take over their regulation.

The Mail on Sunday has been warning for months of the dangers of some of the adverts, which can lead investors to take on more risk than they realise.

Besluit: Adverts for cryptocurrencies will be treated in the same way as other financial promotions, the Financial Conduct Authority now says

The number of UK consumers holding cryptocurrencies rose last year to 2.3million, outpacing understanding of how these assets work. Adverts for cryptocurrencies will be treated in the same way as other financial promotions, the Financial Conduct Authority now says.

This will remedy the contradiction whereby adverts for regulated financial products faced tighter rules than high-risk, unregulated cryptocurrencies. The FCA also revealed it is looking into replacing the banal ‘your capital is at risk’ warning on adverts with wording that is more effective.

In a study, it compared the effectiveness of this standard warning with others such as: ‘This is a high risk investment. You could lose all your money and are unlikely to be protected if something goes wrong.’

It found risk warnings which are more prominent and with messages designed with investor behaviour in mind were more effective.