The UK government has unveiled a plan to clamp down on crypto promotions in an effort to protect retail investors.
HM Treasury, the UK government’s economic and finance ministry, says it is currently looking for feedback on its proposals to regulate cryptocurrency promotions. According to the agency, cryptocurrencies have the potential to expose investors to “unacceptable levels of risk.” HM Treasury identifies three areas of risk including consumer protection, market integrity, and financial crime.
The UK government says they are targeting crypto asset promotions because they are often inadequate or misleading.
“Adverts often overstate benefits and rarely warn of volatility risks, the fact consumers can both grow and lose their investment, and the lack of regulation. There are also examples of regulated firms marketing cryptoasset products without clarifying that this part of their business is not regulated”
A recent study conducted by the UK’s Financial Conduct Authority (FCA) found striking results that highlight the need to implement regulatory frameworks in the crypto space.
“A minority (11%) of current and past cryptoasset owners incorrectly believed that their holdings received regulatory protections. Though a minority, extrapolation from the representative sample suggests this figure represents c. 300,000 people.”
Should the proposal succeed, cryptocurrencies would be regulated similarly to traditional financial instruments.
HM Treasury will stop receiving feedback on its proposals regarding cryptocurrencies on October 26th.
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