The head of the FCA said the agency is expecting new powers for regulating crypto advertisements.
Members of Parliament (MPs) in the United Kingdom have called upon the Financial Conduct Authority (FCA) to limit the use of the word “invest” and “investment” by cryptocurrency firms for promotional purposes.
According to a Thursday report in The Times, MPs at the treasury select committee told FCA chief Nikhil Rathi that the use of the phrase “your investment” often portrays that these are on par with an FTSE 100 company or a unit trust, thus giving the wrong impression about the type of investment.
Harriett Baldwin, Conservative MP for West Worcestershire took special exception to FCA’s supposed inability to stop fraudulent promotions and went on to accuse them of helping criminals:
“Your website actually publishes a list of unregistered crypto-asset businesses for anti-money laundering purposes. It’s meant to be helpful but it could also be helpful to someone who just wants to launder money.”
Rathi assured that the regulatory body is currently looking into the matter and also expecting new powers in terms of regulating crypto advertisements. However, unless those new powers come into practice, there isn’t much that the chief regulatory body can do.
“We’ll have a discussion about what the wording should be,” said FCA chief.
Earlier, FCA chairman Charles Randell had expressed concern over the wordings of the Floki Inu advertisement on London buses but admitted nothing much can be done beyond cautionary warnings for consumers.
The FCA chief also said that the agency is considering dismissing any requests for compensation under the Financial Services Compensation Scheme if people lose money in cryptocurrencies:
“Personally, I would suggest we simply say that anything crypto-related should not be entitled to compensation so that consumers are clear about that when they are investing.”
In July 2021, the Advertising Standards Authority in the U.K. issued a red alert against deceptive crypto advertising and warned consumers to be wary of such ads.
Apart from the U.K., India is another country where authorities have had to get involved over the lack of disclaimers in crypto advertisements. The Delhi High Court recently issued a notice to bring standardized disclaimers for crypto advertisements.