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'Misleading' crypto adverts in the UK will face stricter rules in financial regulator crackdown

Adverts for crypto assets like Bitcoin will face tougher scrutiny under new proposals announced by the UK government
Adverts for crypto assets like Bitcoin will face tougher scrutiny under new proposals announced by the UK government   -   Copyright  Jeremy Bezanger / Unsplash
By Euronews  with Reuters

Britain is to crack down on "misleading" advertisements for crypto assets which could harm consumers, the UK Treasury announced on Monday.

Advertising of cryptocurrencies, such as Bitcoin, has surged particularly in London, prompting concerns about its impact.

The Treasury - the country’s finance ministry - said around 2.3 million people in Britain now own a crypto asset, but research suggests that understanding of what crypto actually is declining, suggesting that some users may not fully understand what they are buying.

"Crypto assets can provide exciting new opportunities, offering people new ways to transact and invest – but it’s important that consumers are not being sold products with misleading claims," UK chancellor Rishi Sunak said in a statement.

Europe moves against crypto ads

The British government's announcement comes a day after Spanish authorities moved to regulate crypto advertising, with new regulations due to come into force next month.

From February, advertisers will have to inform Spain's financial regulator of the content of campaigns targeting more than 100,000 people at least ten days in advance, the government said.

Spain's new rules will also apply to social media influencers who promote crypto assets online.

Willy Sanjuan/Invision/AP
Kim Kardashian was called out for her promotion of crypto on Instagram by the UK's financial regulator last yearWilly Sanjuan/Invision/AP

In the UK, advertising crypto assets will be brought within the scope of existing financial promotions legislation, the Treasury said.

This means the promotion of qualifying crypto assets will be subject to rules set by financial industry regulator the Financial Conduct Authority (FCA), holding them to the same standards as financial promotions for stocks and insurance products, the finance ministry said.

Crypto influencers scrutinised

A business would not be allowed to promote crypto assets unless they are authorised by the FCA or the Bank of England, or the content of the promotion is approved by a firm which is regulated, the ministry added.

Last year, the FCA's chair Charles Randell singled out an Instagram story by Kim Kardashian as an example of risky, unregulated crypto advertising.

A post on Kardashian's account promoting the EthereumMax token may have been the "single biggest" financial advertisement in history, Randell said.

"There is no shortage of stories of people who have lost savings by being lured into the crypto bubble with delusions of quick riches, sometimes after listening to their favourite influencers, ready to betray their fans’ trust for a fee," he added.