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FCA issues warning on cryptoasset social media posts

FCA issues warning on cryptoasset social media posts
The NFT artworks "Cryptopunk#794" and "Cryptopunk#880" by Larva Labs at the Metavision exhibition in Hong Kong (Bertha Wang/Bloomberg)

The Financial Conduct Authority has warned it has no oversight over cryptoassets and non-fungible tokens.

In a statement today (May 11), the regulator said it had seen some recent social media posts regarding the investments.

Although it cannot comment on individual products, the City watchdog said investors should be aware that the FCA does not have regulatory oversight over direct investments in cryptoassets and NFTs.

The FCA said: “There are no consumer protections for those who buy any cryptoassets and NFTs, and they are not FSCS protected. 

“As a result, if you buy cryptoassets you should be prepared to lose all the money you invest.”

It added that those marketing cryptoassets must stick to the guidelines set out by the Advertising Standards Authority (ASA) and state that cryptoassets are not regulated by the FCA. 

“Marketing must also make clear that cryptoassets are not protected by financial compensation schemes.”

Recently, many celebrities with hundreds of thousands of followers have tweeted or posted on Instagram about launching NFT projects.

But Ben Yearsley, managing director at Fairview Consulting, said the trend of sports stars and reality TV celebrities tweeting about crypto is "extremely dangerous" and it is about time the FCA start acting.

"They are tweeting to lots of people who don't understand finance who could get hooked," he said.

Any time anyone asks someone to part with something for investment, the FCA should have the remit to control it, he said.

"Crypto has slipped under the radar it's about time they start acting.

"The FCA needs to get a grip."

In March the ASA issued a warning to more than 50 companies that advertise cryptocurrencies instructing them to review their ads and make sure they are complying the rules.

Crypto advertisements are required to state that all cryptocurrencies are unregulated in the UK and that the value of investments are variable and can go down.