CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78.1% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
US English

UK watchdog seeks powers to regulate crypto ads

By Daniela Ešnerová

15:00, 28 September 2021

FCA chair Charles Randell
FCA chair Charles Randell – Photo: FCA

The UK’s financial services watchdog, the Financial Conduct Authority (FCA), is speaking to the government about being granted powers to oversee crypto advertising.

The FCA’s board was asked about its approach to regulating cryptocurrencies by members of public during the City watchdog's annual meeting.

“The FCA has a really limited remit in terms of cryptoassets and cryptoassets-related activities. They largely sit outside our regulatory framework,” FCA markets director Sarah Pritchard explained. 

She went on to say that one of the regulator's main concerns when it comes to cryptoassets is people's understanding of the risks associated with investing in them.

Be prepared to lose money

She said: “We know that people are increasingly owning cryptoassets – aproximately 2.3 million of us hold cryptocurrencies and cryptoassets and, worryingly, our data shows that around 14% are using credit to do so, which increases people's exposure to loss.”

“And even more worryingly, we have data that shows that 12% of those people think that crypto is somehow protected by the FCA or Financial Services Compensation Scheme.”

Referencing a recent speech by FCA chair Charles Randell, Pritchard said: “You will hear us tell people regularly that they should be prepared to lose all their money when they invest in cryptoassets. And of course, that is a risk that some may take, but I think that it is important that people are aware of the risks that they face.”

Misleading promotions

Speaking about future legislation of crypto, Pritchard said the regulator was working closely with government departments and the Treasury. 

XRP/USD

0.51 Price
-0.070% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

BTC/USD

64,717.60 Price
+2.150% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

ETH/USD

3,112.43 Price
+1.480% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

DOGE/USD

0.15 Price
+2.270% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.0012872

“Particularly, we’re looking at potentially strengthening the scope of financial promotions rules so that those that are making financial promotions and promoting cryptoassets will be brought within the regulatory perimeter.”

“That's for the government to legislate on. But we’re working closely with treasury and other partners as the legislative and regulatory framework develops.”

Under the current rules, firms are required to ensure that their financial communication and financial promotions comply with the FCA’s rules and are “fair, clear and not misleading”.

However, the regulator’s attempts to police this are have not been without their challenges. In recent years, the FCA has been engaging with Google in its efforts to crack down on scam financial ads, which are often rife on social media.

Warning to tech giants

During the meeting today, the FCA’s executive director of enforcement and market oversight Mark Stewart said that tech giants have to do more to stop “dodgy financial promotions” on their sites. 

Steward warned all social media firms to step up their processes or procedures in this area, or face action from the regulator. “We are putting them on notice that we expect them to be involved in this process of protecting the community,” he added.

In July, the UK's Advertising Standards Authority told the Financial Times that monitoring marketing campaigns of unregulated crypto trading platforms is “an absolutely crucial and priority area” for the advertising watchdog.

Read more: FCA to launch campaign against crypto

Related topics

Rate this article

Capital Com is an execution-only service provider. The material provided in this article is for information purposes only and should not be understood as investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents and has not been prepared in accordance with the legal requirements designed to promote investment research independence. While the information in this communication, or on which this communication is based, has been obtained from sources that Capital.com believes to be reliable and accurate, it has not undergone independent verification. No representation or warranty, whether expressed or implied, is made as to the accuracy or completeness of any information obtained from third parties. If you rely on the information on this page, then you do so entirely at your own risk.

Still looking for a broker you can trust?

Join the 610,000+ traders worldwide that chose to trade with Capital.com

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading