Huge rule changes to help protect Britons from losing millions in cryptocurrency [Advance Cash ]

Huge Rule Changes To Help Protect Britons From Losing Millions In Cryptocurrency

BRITS will enjoy greater protection investing in crypto assets such as Bitcoin as the financial watchdog cracks down on the sector.

Refer-a-friend bonuses will be banned under new Financial Conduct Authority (FCA) rules as policymakers have warned investors should be prepared to "lose all their money" in the high-risk market.

Watchdog Cracks Down on Crypto Investment PublicityCredit: Alamy

Companies trading cryptocurrencies and other assets will also have to give new investors a cooling-off period from October 8, 2023.

And people will need to be verified for the appropriate level of knowledge and experience before investing money in Bitcoin, Ethereum, Dogecoin, and other crypto investments.

The FCA said clear risk warnings will need to be in place when companies promote crypto under the new rules.

Investing in crypto is volatile and high risk.

Yet one in 10 adults in the UK now own crypto, with ownership doubling between 2021 and 2022.

Many regretted the "hasty" decisions made with these investments, according to the FCA.

Investors have already revealed how they lost millions of pounds in crypto, while others said multi-million losses destroyed their lives.

Britons were also defrauded of £329 million through crypto scams in 2022, according to data from Action Fraud.

And FTX, which was one of the biggest crypto exchanges in the world, went bankrupt in November with its founder accused of fraud in the United States.

Experts have said that they now expect more rules to be followed for the crypto sector.

Laith Khalaf, Head of Investment Analytics at the AJ Bell Platform, said: “This is probably the thinnest point for crypto regulation as financial watchdogs around the world seek to protect consumers from fraud, sophisticated sales tactics and misleading information.

“This week alone, Binance has been charged with a number of violations by the SEC, and the crypto world is still reeling from the FTX scandal.

"The crypto market has often been compared to the Wild West, but now the sheriffs are coming to town to clean things up."

Cryptocurrency markets are a “cauldron of volatility, prone to wild swings and sharp reversals,” added Myron Jobson, senior personal finance analyst at Interactive Investor.

He said: “Investors need a comprehensive understanding of the volatility, technological complexities and market uncertainties inherent in cryptocurrency betting.

"Failure to provide accurate and balanced information creates a distorted reality, setting unsuspecting individuals down a dangerous path to financial harm."

FCA rules follow government legislation to bring crypto promotions within the remit of the regulator.

Additional guidance setting out expectations for companies advertising crypto to UK consumers could be introduced as the FCA consults on potential changes.

Sheldon Mills, Executive Director of Consumers and Competition at the FCA, said: "It's up to people whether they buy crypto.

"But research shows that many regret making a hasty decision. Our rules give people the time and the right risk warnings to make an informed choice.

“Consumers should always be aware that crypto remains largely unregulated and high risk.

“Those who invest must be prepared to lose all their money.

“The crypto industry must prepare now for this significant change. We are working on additional guidance to help them meet our expectations.

What are the dangers of investing in crypto?

Many people have bought cryptocurrencies and decentralized finance tokens hoping to make a quick return.

Investing is not a guaranteed way to make money - you could lose it all.

Additionally, crypto assets are particularly risky because the markets are so volatile.

Investors should understand these risks before parting with their money.

Some cryptocurrency products and services are very complex to understand with scams in the market.

As a general rule, you should only invest in things you understand.

In some cases, there is no guarantee that you will be able to convert crypto assets back into cash - it may depend on demand and supply in the existing market.

Fees and charges may also be higher than for regulated investment products.