UK Regulator Mandates Cooling-Off Period Rule For Crypto Firms
The United Kingdom Financial Conduct Authority (FCA) has reportedly mandated crypto firms to include cooling off time for new users in their protocols. The cooling-off period is when new investors are briefly educated on the high-risk level of investing in crypto assets.
According to the report, the new set of crypto regulations drafted by the UK regulators and scheduled to come into force from October 2023 included a new user protective rule. The rule stated that crypto firms must consist of a cooling-off time for new users.
During this period, crypto platforms are mandated to clearly inform new users intending to invest in crypto about the risks and dangers involved. Also, they are to warn them that whatever happens to their funds is at their discretion as there would be no protection for their funds either by the firm or the regulators.
According to FCA, cryptocurrency is a risky investment, and people who are just planning to adopt the rapidly growing innovation need to understand its nitty gritty. Hence, it has been decided that crypto firms should include clear risk warnings while advertising their businesses.
Regulators Aim To Protect New Investors
For instance, the UK regulator said the crypto forms are mandated to tell their customers that there is no protection on their investment. Hence, an investor is ready to stomach any loss incurred if anything goes wrong with the crypto firm or assets they invested in.
In addition, they suggested that firms should advise their customers to take at least two minutes to learn more about the investment they want to venture into. Furthermore, the watchdog said there would be no more user referral bonuses.
Additionally, the director of consumers and competition at FCA stated that people have the absolute right to decide if they want to invest in crypto. However, he said that recent research showed that a significant number of people who hastily invested in crypto with much understanding usually regret their actions.
Hence, the director claimed that the new rules would enable potential investors to make informed choices as it provides them with the time and the proper risk alarms. However, he emphasized that crypto is majorly unregulated and risky; hence investors can permanently lose their funds.
UK Aims To Become Crypto Leader Globally
Before the announcement of the new rules, the UK government had revealed that it has just 18 months left to become a worldwide crypto leader. In addition, the country was urged to assign a Crypto Tsar.
Furthermore, the agency responsible for crypto policymaking in the UK, the APPG, issued about 53 proposals on how the country should regulate crypto. In the publication, it urged the government to be cautious as it is still in its early phases of crypto regulations.
Furthermore, APPG reportedly made a research recovery that since the prime minister of the UK, Rishi Sunak, announced the country’s aim to become a global leader in the digital assets industry, much progress has not been made to that effect.
Hence, the group suggested that the government needs to create a clear and pragmatic action strategy that can help it achieve its vision. It added that a whole government strategy must be used to get the robust regulatory framework that the nation desires.
To that effect, APPG proposed that the government assign a Crypto Tsar panel. This panel would be in charge of check-mating all departments involved in the regulation formation, ensuring consistency, expertise, and robust regulation.
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