The Advertising Standards Authority of the United Kingdom has issued 'Red Alert' guidance on cryptocurrency advertisements.
- More than 50 companies have been notified by an independent authority.
- Rulebreakers may be prosecuted, fined, or have their businesses shut down.
The Advertising Standards Authority of the United Kingdom has issued an enforcement notice to more than 50 companies that have promoted cryptocurrency, ahead of a planned crackdown on "misleading and irresponsible crypto marketing" in the country.
The notice, according to the Advertising Standards Authority, is intended to act as a warning to firms to examine and clean up their adverts over the following two months, after which stricter measures to punish rule offenders would be implemented.
Crypto advertisements, which have risen as digital assets have gained widespread appeal, have been targeted by regulators around the world. Earlier this year, governments and watchdogs in the United Kingdom, Singapore, and Spain committed to tighten laws on crypto marketing, including limiting such promotions to just affluent investors – though the United Kingdom has yet to establish a deadline for enshrining that shift in law.
All promotions should clearly and prominently state that cryptoassets are unregulated in the United Kingdom, that any profits may be subject to Capital Gains Tax, and that the value of crypto investments can go down as well as up, according to the ASA's enforcement notice, which was issued on Tuesday. Advertisements in newspapers and magazines, on television, in emails, on outdoor posters, in boosted social media postings, and through paid agreements with influencers are all examples of this.
The ASA said that all commercials airing between now and May 2 will be checked for compliance, with "targeted enforcement action" taken if problems remain after that date. Repeat offenders will be reported to the Financial Conduct Authority as well as Trading Standards, which has the authority to prosecute, penalise, and eventually stop businesses from trading.
The ASA declined to name any of the companies that got the enforcement notice, but alluded to recent ASA judgements against crypto ad companies in the United Kingdom. Coinbase Europe Ltd, Arsenal Football Club, eToro's U.K. subsidiary, and Floki Ltd., which launched adverts in favour of the parody cryptocurrency Floki Inu, are among the companies involved.
In a statement, Guy Parker, the ASA's chief executive, said, "Crypto has grown in popularity in recent years." "We're worried that advertisements may lead consumers to invest money they can't afford to lose without fully comprehending the risks."
The FCA and the ASA have both been chastised for allowing enforcement of deceptive crypto marketing to fall through the cracks, with punishments falling into a murky area between the two organisations' jurisdictions.
In November, the ASA declared cryptoassets a "red alert" priority, citing an increase in complaints about advertisements for cryptocurrencies, utility tokens, and nonfungible tokens. Its enforcement notice coincides with modifications to the United Kingdom's draught Online Safety Bill, which was expanded earlier this month to require social media sites and search engines to prevent paid-for scam adverts.
Meanwhile, the FCA is locked in a battle with the sector over its own cryptoasset regulation, with 18 crypto firms still waiting to hear back on their bids to move from the watchdog's temporary cryptoasset register to full authorisation. If they don't get approval by the FCA's March 31 deadline, major companies including digital bank Revolut Ltd. and crypto brokerage Copper Technologies Ltd. may have to shut down their crypto activities.
In a statement linked to the ASA's enforcement notice, Sarah Pritchard, the FCA's executive director of markets, said, "We will continue to work closely with the ASA to resolve imprecise or misleading crypto advertising." "Those who invest in cryptoassets should expect to lose their entire investment."
