The UK's financial watchdog said it will beef up rules around marketing ofcryptocurrencies and could even put limits on who can invest, following government confirmation yesterday that it will extend the regulator.
The boom in trading has led to a few slaps from the advertising standards watchdog.
The Advertising Standards Authority banned seven ads for taking advantage of consumers and failing to show the risk of the investment.
The financial watchdog is set to put a damper on the UK bubble.
The Financial Conduct Authority said it was acting in response to concerns about the "ease and speed" that people can make high risk investments, in line with a Consumer Investment Strategy it published last year.
Financial ads in the UK have a tighter policy after the watchdog pressure.
Proposed restrictions on the marketing and use of cryptocurrencies are included in the plan for new rules.
Consumers would only be able to respond to financial promotions if they are classified as restricted, high net worth or sophisticated investors, according to the regulator.
The requirement to be clear, fair and not misleading would be one of the rules that firms issuing such promotions would have to adhere to.
The deadline for responses is March 23.
Sarah Pritchard, the executive director of markets, said that too many people are being led to invest in products they don't understand and which are too risky for them. The central aim of our consumer investments strategy is to give people clear, fair information and proper risk warnings.
The government said yesterday that it will legislate to bring the promotion ofcryptocurrencies within the scope of financial promotions legislation to tackle misleading advertising.
In a statement, chancellor, Rishi Sunak, said that it's important that consumers are not being sold products with misleading claims.
We are supporting innovation of the market and ensuring consumers are protected.
According to consumer research published by the FCA last summer, there are 2.3 million Brits who own some form of digital asset. According to the research, there has been a percentage increase of 21% in the number of Brits holding cryptocurrencies.
Other estimates of the number of Brits holding a piece of digital currency have been bandied around by the press in recent months, but they are often located inside the hype bubble.
The number of adults who have heard of cryptocurrencies in the UK has gone up from 42% to 73% in the last year.
The regulator found that despite rising awareness the level of understanding of cryptocurrencies was declining, suggesting that some users may not fully understand what they are buying. Do you think?
The research found that fewer people think buying the assets is a gamble, and more think they are an alternative or complement to mainstream investments.
The UK government and financial regulator have decided it is time to step in with regulatory limits to stop Brits from throwing money at Ponzi-like schemes.
Other countries are doing the same things.
This week, Singapore's financial regulator announced its own restrictions on the marketing of cryptocurrencies.
China and India are going to ban cryptocurrencies.
The free-for-all trading party isn't over yet, but regulators around the globe are slowly closing in.
China says that all cryptocurrencies transactions are illegal.
India plans law that will prohibit all private cryptocurrencies.
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