What is the UK’s 24-Hour Cooling-Off Period?

What is the “cooling off” period in the UK when creating a crypto account? In the UK, people signing up to create a new account must wait 24 hours after creating the new account. The 24 hours must pass before they can deposit, trade, or withdraw funds.

This mandatory “cooling-off” period is designed to make sure consumers entering the fast-paced world of crypto are making measured decisions.

The 24-Hour Cooling-Off Period

The 24-hour cooling-off period is a consumer protection measure introduced to give first-time crypto investors time to reflect on their decision before committing funds. But it’s not just in the crypto industry. The cooling-off period is used across multiple industries.

However crypto users in the UK who sign up for a new CoinJar account can often wonder why they must wait 24 hours before they can start buying and selling crypto.

The Financial Conduct Authority (FCA), the UK’s financial regulator, makes the case that this period ensures users have a chance to assess the risks associated with crypto investments, which remain largely unregulated and high-risk in the UK.

By implementing this pause, the idea is that novice investors won’t rush into trades without fully understanding the potential for loss.

How Did the Cooling-Off Period Come About?

The cooling-off period was introduced as part of broader changes in crypto marketing regulations, effective from October 8, 2023. The FCA finalised these rules in response to high-profile incidents like the collapse of FTX in 2022, which left millions of investors with significant losses.

The regulations were built on the foundation of the Financial Services and Markets Act 2000 (FSMA) and align crypto promotions with other high-risk investments.

The FCA’s policy statement emphasised the need to balance consumer protection with innovation in the digital asset space. The 24-hour delay applies specifically to first-time investors with a crypto firm, prohibiting companies from sending direct financial promotions until the user reconfirms their interest after the waiting period.

Who Enforces the 24-Hour Cooling-Off Period?

The FCA is the primary enforcer of the 24-hour cooling-off period. As the UK’s financial watchdog, the FCA sets standards that crypto exchanges like CoinJar UK must follow. The FCA mandates that all firms marketing crypto to UK consumers comply with these rules, regardless of where the firm is based.

Non-compliance is treated seriously, with penalties including criminal charges, fines, or website takedowns.

CoinJar and the Cooling-Off Period

At CoinJar, we ensure compliance with FCA regulations while offering a seamless user experience.

During the 24-hour cooling-off period, you can complete account setup, verify your identity, and explore our platform’s features, including our intuitive wallet and support for over 60 cryptocurrencies.

There are a few more steps! You can do these while you ride out the 24-hour cooling-off period.

You still need to pass an appropriateness test (knowledge test), and go through our ID verification and customer classification processes. Then you need to wait for funds to arrive in your CoinJar account (unless you are using a card in which case a purchase might be instant).

Then once the above is done, and you have passed the 24 hours, you can deposit funds, trade instantly, or withdraw your funds.

Our support team is available to answer questions, and our Learn section provides guides on everything from deposits to trading strategies.

Conclusion: The 24-Hour Cooling Off Period

The UK’s 24-hour cooling-off period for cryptocurrency accounts was introduced by the FCA in October 2023, this rule reflects the regulator’s commitment to ensuring informed decision-making while fostering innovation. While public sentiment varies, the cooling-off period is designed so that users to approach crypto with greater confidence.