The Advertising Standards Authority (ASA) today issued an Enforcement Notice to over 50 companies which advertise cryptocurrencies, instructing them to review their ads and to ensure they understand and are complying with the rules so that consumers are treated fairly.
The Enforcement Notice provides guidance to the crypto industry on how to stick to the rules and warns that the ASA will monitor for compliance and implement sanctions if they do not see improvements. The guidance requires that advertisers:
should clearly state that cryptocurrencies are unregulated in the UK and that the value of investments are variable and can go down
must not state or imply that investment decisions are trivial, simple, easy or suitable for anyone
must not imply a sense of urgency to buy or create a fear of missing out, or that investments are ‘low risk’
A cryptocurrency is a digital currency which uses encryption techniques to regulate how many units of currency are available and are subject to frequent change in value. Because most people don’t fully understand how cryptocurrencies work, how volatile they can be or how they are not regulated there is a real risk that people may lose money.
This is a ‘red alert’ priority issue for the ASA and they've recently banned several crypto ads for misleading consumers and for being socially irresponsible.
The notice continues their work in clamping down on problem crypto ads. As part of this, the ASA and CAP are working closely alongside the Financial Conduct Authority (FCA) to take action against those who appear unable or unwilling to abide by the rules.
The notice applies to ads for cryptocurrencies, crypto exchanges and ads or promotions which otherwise involve the transfer, sale or supply of cryptocurrencies, targeted at UK consumers or that are targeted globally on behalf of UK-based advertisers.
That means influencers who are paid to promote crypto must also familiarise themselves with the rules and ensure that they are compliant.
The ASA’s Compliance team will conduct follow-up monitoring and if problem ads persist after 2 May, they will take targeted enforcement action to ensure a level playing field. This will include non-compliant advertisers being reported to the FCA, who have worked closely alongside the ASA in helping to distribute the Enforcement Notice.
Advertising Standards Authority Chief Executive, Guy Parker, said:
“Crypto has exploded in popularity in recent years. We’re concerned that people might be enticed by ads into investing money they can’t afford to lose, without understanding the risks. Working alongside the FCA, we’ll take strong action against any advertiser who fails to ensure that their ads are responsible.”
Executive Director of Markets at the Financial Conduct Authority, Sarah Pritchard, said:
“We will continue to work closely with the ASA to tackle 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. Those who invest in crypto assets should be prepared to lose all their money.”
If you want help unravelling the rules and regulations on disclosure, contact influencer marketing regulatory expert Rupa Shah at Hashtag Ad Consulting.