U.K.’s financial watchdog Financial Conduct Authority revealed that it is planning to curb the marketing of cryptocurrencies and other high-risk 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-friend bonuses, the Financial Conduct Authority said.
Consumers are accessing high-risk investments without understanding the risks involved.
A surge in investment scams, particularly online and via social media since the coronavirus pandemic began in 2020, has prompted the regulator to take action, such as refusing 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 without understanding the risks involved,” the financial watchdog said. The planned rules cover high-risk investments such as cryptocurrencies, 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 cryptocurrencies surges.
The FCA move comes as interest in cryptocurrencies has surged. Across the world, a growing number of celebrities have promoted crypto companies online, with some getting into trouble as a result. Reality T.V. 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. Earlier, the Spanish market regulator scolded soccer star Andres Iniesta in November after he promoted cryptocurrency exchange platform Binance on his Twitter and Instagram accounts. Among other prominent figures to promote the emerging tech are the actor Matt Damon, who has fronted a campaign to promote the crypto platform Crypto.com.