The UK financial regulator is pushing for changes that would encourage limits on individuals
holdings and restrict how cryptocurrencies can be marketed, as it further cuts down on retail investment in risky assets.
Companies must use more prominent warnings about high-risk investments, and incentives to invest such as “refer-a-friend bonuses” are now banned, Britain’s Financial Conduct Authority (FCA) said on Monday in a policy document setting out rules for risky marketing. assets in general.
The regulator said it wants to reduce the number of people investing in assets that are riskier than they realise, and wants individual investors to allocate no more than 10% of the net worth of high-risk games.
“We want people to be able to invest with confidence, understand the risks involved and get the right investments for them that reflect their risk appetite,” Sarah Pritchard, the FCA’s chief executive of markets, said in a statement.
The rules detailed Monday do not immediately apply to cryptocurrencies. Final rules on how the FCA will oversee the marketing of digital assets are still making their way through the legislative process.
However, the regulator said the recent crash in crypto prices – the market value of digital assets has collapsed to $1.1 trillion from nearly $3 trillion in nine months – reinforces the view that tokens are also speculative and high-risk products.
“Consumers should only invest in crypto assets if they understand the risks involved and are prepared to lose all their money,” the FCA said in its report. “We expect to have a consistent approach to cryptoassets relative to other high-risk investments.”
Crypto regulation is starting to take firmer shape globally – especially in Europe – after years where lawmakers and regulators largely stood on the sidelines of this emerging and high-growth area.
In the United States, efforts by members of Congress have focused on issues in digital assets, including rules for stablecoin issuers, tax implications for crypto profits, and figuring out how oversight of tokens should be distributed among regulators.
Securities and Exchange Commission Chairman Gary Gensler earlier this year tasked agency staff with studying how to expand investor protections to crypto platforms and addressing how to regulate platforms where both securities and assets not considered securities are traded.
Write to Jack Denton at [email protected]