These include a 24-hour cooling-off period for first time investors, a ban on refer a friend incentives, and the requirement for firms to put clear risk warnings in place.

This means crypto advertising could include phrases telling investors they could lose all their money if something goes wrong or warning them not to invest unless they are prepared to lose all of the money invested.

Any adverts for cryptoassets, more commonly known as crypto, must also be “clear, fair and not misleading” and “potential customers must have the appropriate knowledge and experience to invest in crypto” the Financial Conduct Authority (FCA) said.

The rules come into force on 8 October 2023, and comes as FCA research showed that crypto ownership more than doubled between 2021 and 2022, with one in 10 people now owning crypto.  

However, many organisations, including the Government, have been calling for stricter regulations for crypto for some time, with draft plans to regulate crypto published in February. 

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Following a consultation earlier this year, new Government legislation will put promotions of crypto under the FCA’s control.

The regulator is also consulting on additional guidance for crypto firms advertising to UK consumers and this is open until 10 August.  

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

“Consumers should still be aware that crypto remains largely unregulated and high risk. Those who invest should be prepared to lose all their money.

“The crypto industry needs to prepare now for this significant change. We are working on additional guidance to help them meet our expectations.”

‘Crypto: Better safe than sorry’

Laith Khalaf, head of investment analysis at AJ Bell, said: “This is likely to be the thin end of the wedge for crypto regulation, as financial watchdogs across the globe seek to protect consumers from fraud, sharp sales tactics and misleading information.   

“Greater financial regulation of crypto might encourage more established financial services firms to enter the market, opening it up to new consumers – though there are still good reasons why they may continue to keep a safe distance. In any case, the fact that 10% of UK adults own crypto demonstrates this is already a mass market. Better for it to be safe than sorry.”

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “Crypto firms selling to UK consumers were warned back in February that they would need to get ready for regime change, and now the date has been set and the clock is ticking. 

“Relentless warnings about the dangers of pouring money into high-risk investments are clearly not working, and with crypto turning mainstream, the regulator is flexing its newly found muscles to help police the space.

“These new rules are unlikely to satisfy some MPs who called for crypto to be regulated like gambling, with strict affordability triggers now imposed across betting firms to try and reduce addiction. These rules won’t go as far, but at least now the FCA has run on the pitch with a whistle and the threat of a serious red card if firms don’t meet requirements.” 

This is echoed by PIMFA, the trade association for wealth management, investment services and the personal investment and financial advice industry which has raised concerns about the FCA proposals, specifically their classification as Restricted Mass Marketed Investments (RMMI).

David Ostojitsch, director of Government relations and policy at PIMFA, said: “There is clearly a future role for cryptoassets, but only if they are marketed appropriately and to the right people. Crypto-assets are not regulated, are highly volatile and therefore high risk and should only be invested in by sophisticated investors who understand the risk they are taking, not mass market investors.

“There is a significant danger here that consumers will assume crypto assets are safe because they are being marketed by an FCA-regulated person or firm. Again we would stress this is not the case.”