- Major cryptocurrencies have begun to gain traction after a significant drop in price.
- Crypto-related crimes have been on the rise, with opportunists using fake endorsements to attract “investors.”
- The UK, as well as other European governments, are working to create stricter laws to control the promotion of crypto assets.
Most major cryptocurrencies are finally seeing a rise in prices after dropping to a 6-month low. The price plunge had been equated to the so-called Crypto Winter of 2018. The price of Bitcoin had bounced back from $33,000 at the end of January to climbing above $37,000 at the onset of February. There have been analysts that have claimed that there may be some market trends hinting at a return above $40,000.
The reason for the crash had been attributed to the announcement made by the United States Federal Reserve Chairman Jerome Powell, who said that the government would begin raising rates in March to counteract the ongoing rise in inflation. News reports have stated that January’s drop for Bitcoin comes amid a difficult stretch for the stock market and the release of the Federal Reserve’s report on a possible government-issued digital currency. The big selloff could also be, at least partly, due to investors taking a new look at their portfolios.
Cryptocurrency Fraud on the Rise in the UK
However, as the value of cryptocurrencies starts to rise, so too has the number of scams related to the digital trading platform. According to the latest data from the United Kingdom’s fraud reporting service, Action Fraud, cryptocurrency investment-related scams rose by 57% across the U.K. in 2020—seeing a total of 5,581 reports made. Investors lost a total of more than £146,000,000 to crypto scammers in 2021, up from £76.6 million in 2019 and around a third more than what was lost throughout 2020.
One popular tactic is the use of fake endorsements to defraud victims. Criminals have been known to present credible and professional-looking online adverts, send out emails and even go as far as creating websites to advertise for fake investment opportunities— including cryptocurrency.
The UK National Fraud and Cyber Crime Reporting Centre have cautioned against these investments stating, “Often, fake testimonials are accompanied with a picture of a well-known figure to help the investment seem legitimate.” Crypto traders are advised to stick to reputable trading apps such as Bitcoin Prime, Binance, and Coinbase instead of depositing money into the accounts of individuals that lack credibility and sell “get rich quick” schemes.
Government to Strengthen Regulations on Cryptocurrency Adverts
As a result of such scams, the UK Treasury announced that Britain would be cracking down on “misleading” advertisements for crypto assets which could be harmful to consumers. “Crypto-assets can provide exciting new opportunities, offering people new ways to transact and invest – but it’s important that consumers are not being sold products with misleading claims. We are ensuring consumers are protected while also supporting the innovation of the crypto-asset market.” UK chancellor Rishi Sunak said in a statement.
Spain has also tightened rules pertaining to how social media influencers and others can now advertise for cryptocurrency. According to Reuters, crypto advertisers are required to show their intended content to the Spanish National Securities Market Commission (CNMV).
In the UK, the advertising of crypto assets will be adopted within the scope of present financial promotions legislation. The new regulation complements broader proposals pertaining to crypto-assets and stablecoins that have been set out via the government’s consultation on a regulatory framework for stablecoins in 2021.
The government plans on implementing a suitable transitional period of–approximately six months– from both the publication and finalisation of the proposed Financial Promotion Order regime as well as the complementary FCA rules. Authorities have advised that their next steps will be announced in due course.
When done correctly, cryptocurrency transactions are relatively a quick and straightforward process, which is why crypto payments are becoming more widely used every day. Large organisations and in sectors including fashion and pharmaceuticals and even donations are being made via digital currency.
Cryptocurrency is growing in popularity at record speed. As the world restructures itself to a digital format, the likelihood of a universal currency that does not require a 3rd party facilitator becomes more attractive. However, there are factors such as price volatility, trading regulations, and fraudulent activities that still need to be combatted. Nonetheless, cryptocurrency is set to be a lucrative investment with a strong future.