UK Regulator’s New Crypto Rules Include ‘Cooling-off Period’ for Investors

Regulations include provision prohibits companies from engaging with prospective consumers until they reconfirm interest at least 24 hours later


Evdokimov Maxim/Shutterstock modified by Blockworks


The UK’s top finance regulator is currently in the process of finalizing rules concerning crypto marketing. This action is being taken because it says that there is a “growing mismatch” between consumers’ investment decisions and their risk tolerance.

New regulations from the Financial Conduct Authority (FCA) require those promoting crypto assets to put in place clear risk warnings, ensure advertisements are not misleading and allow for investors to back out of potential investments within a set timeframe.

A policy statement published Wednesday said the latest rules “strikes the right balance between consumer protection and promoting potentially beneficial innovation.”

The regulator finalized rules last August to ensure firms marketing “high-risk investments” include better risk warnings, but noted at the time the regulations would not apply to crypto promotions.

Now, after considering feedback from a February proposal, the FCA’s rules around crypto promotion are “near final,” according to the policy statement. 

They are expected to take effect on Oct. 8 after a four-month transition period.

“It is up to people to decide whether they buy crypto, but research shows many regret making a hasty decision,” Sheldon Mills, the FCA’s executive director of consumers and competition, said in a statement. “Our rules give people the time and the right risk warnings to make an informed choice.  

To legally promote crypto assets to consumers, people and businesses must be “authorized,” registered with the FCA or communicating in compliance with an exemption. Promotions not made using approved methods are punishable by up to 2 years in prison, fines, or both. 

The new rules also require those marketing crypto assets to UK consumers to introduce a 24-hour “cooling-off period” for first-time investors with a firm. 

This would prohibit a company or individual to send a consumer what the FCA calls a Direct Offer Financial Promotion (DOFP) unless that consumer reconfirms their request at least 24 hours later. 

“This is intended to ensure that extra protections kick in before consumers are in a position — as a result of the DOFP — to take the crucial step towards placing their money in the investment,” the FCA’s policy statement notes.

​​Susannah Streeter, head of money and markets at financial services company Hargreaves Lansdown, labeled the cooling-off period one of the more significant requirements. 

In particular, she noted, it helps novice users of exchanges who might get “cold feet” when it comes to crypto investments. 

“This may help reduce the pile-on effect with some coins surging to eye-watering levels spurred on by frantic purchases driven by the [fear of missing out] effect,” Streeter added. “The FCA is clearly worried that far too many consumers are gambling away their money, desperate to catch a ride upwards, no matter how risky the journey is.”

More crypto holders to protect

The new rules come as the number of crypto holders in the UK more than doubled in a one-year span, according to FCA survey findings published Wednesday.  

Conducted in August 2022, the survey gathered responses from more than 2,000 people in the country. UK adults holding crypto assets numbered roughly 5 million at the time, according to FCA findings — up from 2.3 million in 2021.

The most common reason for purchasing crypto assets — as reported by 40% of respondents — remains “as a gamble,” according to the FCA findings. Roughly 30% of those surveyed said they regretted purchasing cryptoassets.

In terms of crypto promotion, 36% of adults have digested crypto-related advertisements. Eighteen percent of crypto users reported being influenced to purchase such assets because of advertising.

The FCA regulations also follow the SEC’s crackdown on crypto exchanges in the US. The securities regulator brought lawsuits against crypto exchanges Binance and Coinbase on Monday and Tuesday, respectively, for allegedly operating unauthorized exchanges and other securities violations — 

The exchanges have denied wrongdoing. 

Binance.US said in a tweet that the SEC filing is “unjustified by the facts, by the law, or by the Commission’s own precedent.” Coinbase Chief Legal Officer Paul Grewal said Tuesday that the SEC’s enforcement-only approach in the absence of clear crypto guidelines hurts companies like Coinbase “that have a demonstrated commitment to compliance.”

“It’s clear the FCA recognizes the damage that can be done to overall investor confidence when such high-risk investments are bought by people who seem woefully unaware of the risks,” Streeter said. “However, it knows it’s also walking a tricky tightrope.” 

She added: “It recognizes these beefed-up safeguards are needed to ensure consumers are more protected from another FTX style implosion, but at the same time it doesn’t want to quash innovation in the digital coin and blockchain space.”

Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.


Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research Report Templates.png


ZKPs enable efficient offchain transaction processing and validation, resulting in increased throughput and reduced fees. Solana's ZK Compression leverages ZKPs to minimize onchain storage costs, while Sui's zkLogin streamlines user onboarding by replacing complex key management with familiar OAuth credentials.


The crypto asset manager lowered its planned fee from 0.25% to 0.15%, undercutting its competitors


Plus, a look at planned ETH ETF fees and how they differ from their BTC counterparts


North Korea suspected in breach of Indian exchange’s multisig wallet


Plus, Sanctum’s CLOUD token has officially launched — but not without problems


It’s not yet clear whether Donald Trump is pumping bitcoin. But an unofficial memecoin is still seeing benefit.