U.K. watchdog calls out 50 crypto companies that could be punished for misleading ads
The U.K.’s advertising watchdog sent a “red alert” letter to 50 crypto companies on Tuesday warning it may need to act against misleading ads.
The enforcement notice from the Advertising Standards Authority (ASA) went out to firms including Coinbase, eToro, Luno, and Crypto.com, CoinDesk reported, advising them to review their ads to make sure they comply with newly issued guidance.
“This is a ‘red alert’ priority issue for us, and we’ve recently banned several crypto ads for misleading consumers and for being socially irresponsible,” the ASA said in a statement.
The watchdog is now requiring crypto advertisers to clearly state that cryptocurrencies are unregulated in the U.K. and that the value of investments in the space is “variable” and may drop.
Crypto ads are also not allowed to imply a sense of urgency, that crypto investments are “low risk,” or that investment decisions are easy and fit for everyone, and they can’t create the classic FOMO (fear of missing out).
“We’re concerned that people might be enticed by ads into investing money they can’t afford to lose, without understanding the risks,” the CEO of the Advertising Standards Authority, Guy Parker, said in a statement announcing the enforcement notice.
Companies advertising cryptocurrencies or related services have until May 2 to ensure their ads comply with the new regulations. After that, noncompliant advertisers will be reported to the U.K.’s financial watchdog, the Financial Conduct Authority (FCA).
“Working alongside the FCA, we’ll take strong action against any advertiser who fails to ensure that their ads are responsible,” ASA’s CEO added.
Crypto ad crackdown
The U.K. ad authority has been escalating its crackdown on cryptocurrency marketing and its wild profit claims over the past few years, with an increasing number of ads being pulled from the internet and airways.
The watchdog banned seven cryptocurrency ads from firms including Papa John’s and Coinbase in December for “irresponsibly taking advantage of consumers’ inexperience and for failing to illustrate the risk of the investment,” and even prevented Arsenal soccer club’s fan token promos, arguing they “trivialised investment in cryptoassets.”
In January, the ASA also banned two Crypto.com ads for “misleading” consumers with “irresponsible” ads, and the regulator is taking further steps to get financial authorities involved.
The FCA has stepped up its oversight of crypto advertising after it was granted additional powers by the government in January. The financial watchdog now classifies cryptoassets as “restricted mass market investments” after research indicated consumers were investing without being aware of associated risks.
“Too many people are being led to invest in products they don’t understand and which are too risky for them. People need clear, fair information and proper risk warnings if they are to invest with confidence, which is the central aim of our consumer investments strategy,” Sarah Pritchard, the FCA’s executive director of markets, said in a statement announcing the increased oversight.
On March 11, the FCA made one of its first enforcement actions using its new power, halting the operation of crypto ATMs in the country, stating that none of the ATMs currently in operation were currently permitted.
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