The Financial Planning Standards Board (FPSB) has recommended that investors take specific tests before investing in complex products like cryptocurrencies.
According to press releaseThe FPSB believes that investors should demonstrate at least a minimum level of financial literacy given that cryptocurrencies are largely unregulated and come with numerous risks. In its recommendation, the supervisory authority refers to the requirement of the International Organization of Securities Commissions (IOSCO).
“If IOSCO members continue to allow self-investment in complex products, the ability of the self-employed retail investor to access digital trading platforms should require successful completion of a financial knowledge test to demonstrate a minimum level of financial literacy and ability,” the statement said.
The regulator claims that the development of the crypto industry creates additional risks, in addition to fraud. FPSB calls for additional opportunities for investors to receive financial advice before investing in crypto assets. In addition, crypto asset licensing and product regulation authorities are trying to keep up with the rapidly changing market situation.
FPSB is asking IOSCO to ban the use of credit cards when buying digital currencies. Since social networks play a key role in attracting investors, the regulator calls for restrictions on the participation of influential financial persons in the promotion of crypto projects – media persons in the field of financial technology should be qualified as financial advisers.
To prevent fintech scams on social media, the FPSB suggests that IOSCO work closely with tech firms and punish offenders for defrauding investors. These proposals are part of IOSCO’s push to put in place a unified global regulatory mechanism for cryptocurrencies in the face of increased investment.
The FPSB’s concerns are not unfounded. According to the Bank of Canada, the majority of Canadians investing in bitcoin do not have the proper level of financial literacy.
Source: Bits
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