The U.K. financial regulator is pushing for changes that would encourage caps on individual
holdings and limit how cryptocurrencies can be marketed as it clamps down more broadly on retail investment in risky assets.
Firms must use more prominent warnings on high-risk investments, and incentives to invest such as “refer a friend bonuses” are now banned, the U.K. Financial Conduct Authority (FCA) said Monday in a policy document laying out rules on the marketing of risky assets in general.
The regulator said it wants to reduce the number of people investing in assets that are riskier than they realize, and wants individual investors to allocate no more than 10% of their net assets to high-risk bets.
“We want people to be able to invest with confidence, understand the risks involved, and get the investments that are right for them which reflect their appetite for risk,” Sarah Pritchard, the FCA’s executive director for markets, said in a statement.
The regulations detailed Monday don’t immediately apply to cryptocurrencies. Final rules on how the FCA will oversee digital-asset marketing are still making their way through the lawmaking process.
However, the regulator said the recent crash in crypto prices—the market capitalization of digital assets has collapsed to $1.1 trillion from nearly $3 trillion in nine months—cements its view that tokens are also speculative and high-risk products.
“Consumers should only invest in cryptoassets if they understand the risks involved and are prepared to lose all of their money,” the FCA said in its report. “We expect to take a consistent approach to cryptoassets to that taken for other high‑risk investments.”
Crypto regulation is beginning to take firmer shape globally—especially in Europe—after years during which lawmakers and regulators largely stood by the sidelines of this nascent and high-growth space.
In the U.S., efforts from members of Congress have focused on issues in digital assets including rules for stablecoin issuers, tax implications for crypto capital gains, and figuring out how oversight of tokens should be parceled out among regulators.
Securities and Exchange Commission Chairman Gary Gensler earlier this year tasked staff at the agency with studying how to extend investor protections to crypto platforms and addressing how to regulate platforms where both securities and assets not considered securities trade.
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