UK bans giving away NFTs and cryptocurrencies for advertising

According to a report published by the FCA, the new regulations will come into effect on October 8. Cryptocurrencies will be classified as “restricted public market investments” and require advertisements for cryptocurrencies to carry clear risk warnings. In addition, incentives to encourage the public to invest in cryptocurrencies will be banned.

Airdrop is the act of giving away tokens from a project to the community. Usually, cryptocurrency companies will use this strategy to promote new projects and attract potential investors. This is an effective marketing method for cryptocurrency projects in recent years.

Using NFTs and free crypto giveaways can expose users to risky crypto purchases

Many crypto companies and celebrities have introduced free NFTs to customers and fans, and many projects have also launched crypto airdrops for promotional purposes.

Using free NFTs and crypto giveaways could lead users to buy risky cryptocurrencies, says FCA head of payments and digital assets Matthew Long.

According to the FCA, when it consulted on marketing regulations last year, respondents largely disagreed with proposals such as banning incentives, treating cryptocurrencies as a mass-market investment, and blocking new investors from receiving non-real-time promotional offers (DOFP).

Only FCA-authorised organisations can approve their own advertising. As there is currently no regime that allows the FCA to fully authorise cryptocurrency companies, the government has created a temporary exemption for FCA-registered cryptocurrency companies.

Mr Long said the FCA had listened to feedback to create “the safest possible set of regulations”, adding that the FCA’s registration regime had high standards for preventing money laundering and managing it safely. Since January 2020, the FCA has received 318 applications for digital currencies and 41 digital currency companies have completed the registration process with the agency. The FCA has faced some criticism from companies about the lengthy registration process.

FCA Competition and Consumer Affairs Executive Director Sheldon Mills said the crypto industry needs to prepare now for this significant change. According to Cointelegraph , the regulator is working on additional guidance to help companies comply with the regulation.

Under the new regulations, cryptocurrency companies are required to verify that investors have the necessary knowledge and experience to participate in cryptocurrency investments. Furthermore, cryptocurrency advertisers must provide transparent risk warnings and ensure that their advertisements are fair, clear, and free of any misleading information.

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