The Financial Conduct Authority, a top-tier United Kingdom regulator in the sphere of finances and banking, has released "discussion paper" DP 21/1: "Strengthening our financial promotion rules for high-risk investments and firms approving financial promotions." What does this mean for crypto?
Should we classify cryptocurrencies as high-risk assets?
The Financial Conduct Authority has released a thesis to initiate a discussion crucial for the entire fintech scene. It is designed to elaborate new rules of "promotion" for all "high-risk" services.
The authors of the document call for all interested parties (including "firms operating in the cryptoassets market") to join the discussion about financial service promotion.
While the document itself just asks financial services vendors about the exposure of their clients to high-risk products and possible new regulatory measures in this field, it definitely looks like crypto promotion regulation rules will be also strengthened.
The Treasury proposed bringing some cryptoassets into the scope of the financial promotion regime, to enhance consumer protection. The issues discussed in this paper may be relevant to promotions for cryptoassets to the extent they are brought within the scope of the financial promotion regime.
Market newbies are interested in cryptocurrencies
DP authors also admitted that new "self-directed" investors show big interest in cryptocurrencies. Unfortunately, 45 percent of them did not view "losing some money" as a potential risk of their activity.
As a result, cryptocurrencies services promotion should be regulated to protect unqualified traders from being exposed to extra risks, the document says.
As covered by U.Today previously, FCA is well known as one of the strictest watchdogs in the cryptocurrency segment. Besides banning crypto derivatives trading to retail clients, it also made all regulated platforms file financial crime reports.