UK Industry Members Agree That the FCA Is Proposing to Stop Marketing Cryptocurrencies as “Inflation-Resistant,” UK Industry Members Say
The UK digital asset community appears to be largely backing a proposal by the country’s financial regulator to block companies from promoting cryptocurrencies as an inflation hedge.
Industry watchers tell AskFX that while the popular argument that constrained-supply cryptos like Bitcoin (BTC) can withstand soaring prices may sound theoretically valid, the lack of data and the volatility of crypto-assets also lead to it may mislead investors.
The FCA rules for crypto promotional materials in the UK were enacted on Thursday. This includes a ban on free non-fungible (NFT) token giveaways and airdrops. The FCA’s guidance on the new rules targeted stablecoins. It states that companies must be able to prove “claims to stability or a connection to a fiat money” as legitimate.
The guidelines state: “We expect companies to also consider the potential harm to consumers and to rely on issuer claims.” “Companies should not use terms such as ‘inflation resilient’ that could mislead customers.
Shea added that cryptocurrencies are not designed to accommodate inflation. The inflation narrative is medium to long term and driven by expectations. [of] The sharp increase in the supply of fiat currencies in recent years -gilts, or inflation-linked government bonds, whose value increases in line with the inflation index.
Shea explained that the supply of gold and cryptocurrencies like bitcoin, which is finite or fixed, is similar.
James Butterfill is Research Director at CoinShares. He said that despite its popularity, Bitcoin is a relatively new cryptocurrency. The data available are limited.
Butterfill, a AskFX contributor, said that due to bitcoin’s short history, we must rely on its fundamentals as an asset. Its limited supply and price in US dollars should theoretically act as a hedge against inflation.
S&P Global, a rating agency, said that while cryptocoins could theoretically be used as a hedge against inflation, the lack of evidence to support this theory undermines their argument.
Investors don’t care about marketing slogans that claim bitcoin or other currencies can be used as a hedge against inflation. Instead, they want to know how it works.
Shea added that cryptocurrencies are not designed to accommodate inflation. The inflation narrative is more long term and driven by expectations
The sharp increase in the supply of fiat currencies in recent years. [of] Ballon Ossio said that “it is understandable that the FCA would want to ban this species”. of the advertisement.
He said: “I don’t think the reference to ‘inflation resilient’ is a bad thing, but it’s important for companies to think carefully about what they say and make sure they’re not misleading.” (* ) On October 8th, the FCA will introduce new rules for crypto marketing.
UK FCA proposes ban on crypto inducements in tough new marketing rules.
