UK Crypto Experts and Companies Agree with the FCA’s New Marketing Rules for Crypto
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The FCA-short for Financial Conduct Authority-is the UK’s top watchdog regarding anything in finance. It regulates financial companies and how they affect any market, their ads, and everything else related to their services. While the FCA doesn’t specifically govern cryptocurrencies, it does offer recommendations for the digital assets space. Its latest recommendation is for crypto companies to move away from advertising crypto as a hedge against inflation.
It was something that raised the eyebrows of many crypto enthusiasts who are wondering what the FCA is doing even talking about crypto. However, the FCA’s tough rules in the UK in regards to crypto have found support in the unlikeliest of spaces – members of the digital asset space.
The FCA May Be Right
It’s hard to find an example where digital asset members and companies have clapped hands on a governmental decision. However, it must be said that the FCA is doing everything with the right intention in mind. While cryptos are still not legal in the UK, its latest move to hold off cryptocurrencies being promoted as an inflation hedge are proper. It comes after the country introduced new and tougher rules, while recognizing cryptocurrencies as a legal financial instrument.
The argument behind it all is that limited-supply cryptos such as BTC can stand their ground against inflation only theoretically. However, the high volatility and lack of data are ruining the picture. It’s misleading to think that it’s a safeguard against inflation, which has recently been more rampant than ever before. While cryptocurrencies may provide a bit of shelter, crypto investments can also backfire. Promotion Bitcoin and other cryptos as an inflation hedge is wrong and a practice we agree must be brought to an end.
The UK’s FCA is doing its best to prevent it, although there’s no law against it. However, the UK recently announced a tougher state on the crypto market including a ban on airdrops and NFTs. By weeding the market out of bad influences, the crypto market will be much stabler.
Taking Aim at Stablecoin Issuers
In reality, the FCA is doing these moves to aim at stablecoin issuers and firms. They should be able to demonstrate stability of their coins linked to fiat currencies. The FCA also announce it’s expecting companies to consider the harm they might bring upon consumers. Firms should also use terms that are clear and not misleading to consumers. For example, ‘inflation resistant’ is one term that should be avoided in the future.
The whole inflation narrative has been harmful. It has led many to buy cryptocurrencies during the most recent bull run only to lose a big portion of their investment during the long crypto winter. As such, cryptocurrency shouldn’t be advertised as inflation hedge, and in this case, the FCA is right to do so.
It’s good that firms and crypto experts have recognized the message and approved it. By working together, the crypto market will be a much safer place for young investors. That’s what we should all strive for, and this time, the FCA really stood on the side of the people.
