The UK’s financial watchdog has warned that the marketing of cryptocurrency investments on social media presents a significant risk to consumers.
The Financial Conduct Authority issued the warning on Thursday (22 September), ahead of new regulations scheduled to come into effect on 8 October 2023 which further restrict the promotion of crypto assets.
Lucy Castledine, director of consumer investments at the regulator, said consumers are at risk of “taking advice from unregulated sources, such as social media, investing in assets with a higher risk than their tolerance and making them more vulnerable to scams.”
Castledine said the FCA is seeking to implement new restrictions so that the UK market offers appropriate products in a transparent way.
“We want to see a market where consumers can only access products and services that meet their needs and that means making sure there is a wide variety of support available,” she said.
The FCA director added that the decentralised nature of technology has led crypto assets becoming particularly attractive “to bad actors seeking to launder their funds”.
The warning comes two days after the Online Safey Bill passed its final reading in the House of Lords.
The FCA has made clear that social media platforms and app stores have played a significant role in the marketing of crypto assets, adding that they should “cease supporting and facilitating unregistered crypto firms illegally marketing into the UK.”
New FCA guidelines on social media, financial services influencers, and cryptocurrency are expects to be released next month.