Referral Master's End? Rejecting the Direct Sales Culture in the Crypto Industry, UK's FCA to Ban Referral Bonuses and Combat Anti-Inflation Rhetoric

The Financial Conduct Authority (FCA) in the UK has announced new restrictions on cryptocurrency advertisers, including a "cooling-off period" for first-time investors and a ban on "bonus promotions." These restrictions will come into effect on October 8th.

Withdrawals within 24 Hours of First Trade

The Financial Conduct Authority (FCA) is the financial regulatory body in the UK responsible for regulating the conduct of financial markets, protecting consumers, and promoting financial stability. While the EU has passed the Markets in Crypto-Assets Regulation (MiCA), the UK is also in the process of creating a broader set of rules for crypto assets known as the Financial Services and Markets Bill (FSMB).

This bill, currently in its final reporting stage before the third reading in the House of Commons, will then be sent to King Charles III for formal enactment into law. It will ensure that crypto is treated as a regulated activity, giving the FCA the power to regulate the industry and protect consumers. Currently, the FCA only has the authority to ensure that crypto companies are registered and comply with their anti-money laundering rules.

According to a report by Bloomberg, cryptocurrency firms will have to introduce a 24-hour "cooling-off period" for first-time investors starting from October 8th, as many people tend to regret hasty decisions, and the new regulations provide individuals with time and proper risk warnings to make informed choices. The FCA has previously employed such mechanisms for other high-risk investments.

End of Referral Code System

Crypto companies must also end their referral bonus systems, which have been lucrative for Key Opinion Leaders (KOLs) in the crypto sphere, as this could lead clients to be overly confident about the suitability of their investments. Advertisements must include warnings, and investors must be prepared to lose funds in their investments.

As per regulatory requirements, all companies selling crypto assets to UK consumers must be prepared to comply with the new regulations by October 8th. The FCA stated that for companies breaching the rules, strict enforcement actions will be taken, requiring them to shut down their websites or restrict their operations, and enforcement penalties will be imposed.

No More Cryptocurrency Promotion Chaos, Clear Regulation Status

The FCA mentioned that the new regulations will reduce the marketing of crypto assets to UK consumers by unauthorized or unregistered companies. Companies or individuals engaging in crypto marketing activities must be approved by regulatory bodies and be accountable for their advertisements. Authorized companies approving or conveying crypto asset promotions must comply with the new consumer responsibilities effective from July 31st, which require better treatment of retail investors.

The FCA stated that crypto companies must be able to demonstrate a coin's stability or its relationship with fiat currencies and should not mislead consumers with terms like "inflation-resistant."

The regulatory body emphasized that companies should clearly state their regulatory status in advertisements, and companies registered under anti-money laundering regulations should not imply this as regulatory authorization.