Regulator targets 50 companies for ‘misleading’ crypto ads

Britain’s Advertising Standards Authority (ASA) has issued enforcement notices to more than 50 companies that advertise cryptocurrencies, the regulator has revealed.

The ASA asked them to review their advertisements to make sure they understand and follow the rules for treating consumers fairly.

The guidelines require advertisers to:

  • State that cryptocurrencies are not regulated in the UK and the value of investments is variable and may fall;
  • Not state or imply that investment decisions are trivial, simple, easy or suitable for anyone; and,
  • Don’t imply a sense of urgency to buy or create a fear of missing out, or that investments are ‘low risk’.

The watchdog said the issue was a “red alert” priority, as it recently banned several crypto ads for “misleading consumers” and for being “socially irresponsible.”

The Enforcement Notices apply to advertisements for cryptocurrencies, cryptocurrency exchanges and advertisements or promotions which “otherwise involve the transfer, sale or supply of cryptocurrencies, aimed at UK consumers or […] on behalf of UK-based advertisers,” the regulator explained.

Be prepared to “lose all your money”

ASA Managing Director Guy Parker said, “Crypto has exploded in popularity in recent years. We are concerned that people will be tricked by advertisements into investing money they cannot afford to lose, without understanding the risks.

“Together with the Financial Conduct Authority (FCA), we will take strong action against any advertiser who fails to ensure their ads are responsible.”

Sarah Pritchard, FCA’s Executive Director of Markets, added, “We will continue to work closely with the ASA to combat unclear or misleading crypto advertising.

“People should be wary of any promotion promising high investment returns and do further research before investing, including through the FCA’s InvestSmart website.

“Crypto-assets are unregulated and those who invest in them must be prepared to lose all their money.”

Greater regulation ‘can’t come soon enough’

Myron Jobson, senior personal finance analyst at Interactive Investor, said he fears the current cost-of-living crisis is pushing consumers to make hasty decisions in a bid to get more money quickly.

“Ads promoting cryptocurrency have become increasingly hard to miss, often appearing on social media platforms and even on public transport,” he said. “The worry is that at a time when many are looking to shore up their finances amid the pressure of the cost of living, people will be duped by misleading advertisements to put money into these high-risk products that don’t just don’t suit them.

“Cryptocurrencies are highly complex, volatile and, combined with the inherent difficulties of reliably valuing crypto-assets, put consumers at high risk of loss.

“Our research found that 45% of young adults aged 18-29 are first introduced to investing via a high-risk cryptocurrency – and an alarming number are funding this via a cocktail of credit cards, loans student and other loans. The influence of advertising on cryptocurrencies cannot be underestimated here.

“Hopefully the actions of the ASA will help curb dodgy and downright misleading crypto advertisements. Advertisements promoting crypto-assets with great promises for investors come under scrutiny.

“Earlier this year, the government presented a plan to legislate to tackle misleading promotions of crypto-assets and bring them in line with other financial advertising. Greater regulation on crypto advertising cannot come soon enough.

About Ricardo Schulte

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