The UK Advertising Standards Authority (ASA) has issued enforcement notices to over 50 companies that advertise cryptocurrencies, the regulator revealed.
The ASA has instructed them to review their ads to ensure they understand and comply with the rules to treat consumers fairly.
The guidance requires advertisers to:
- State that cryptocurrencies are unregulated in the UK and that the value of investments are variable and can go down;
- Not state or imply that investment decisions are trivial, simple, easy or suitable for anyone; and,
- Not 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 is a ‘red alert’ priority as it has recently banned several crypto ads for “misleading consumers” and for being “socially irresponsible”.
The enforcement notices apply 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 […] on behalf of UK-based advertisers,” the regulator explained.
Be prepared to ‘lose all your money’
ASA 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 Financial Conduct Authority (FCA), we’ll take strong action against any advertiser who fails to ensure that their ads are responsible.”
Sarah Pritchard, FCA executive director of markets, added: “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.
“Crypto assets remain unregulated and those who invest in them should 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 is worried that the current cost of living crisis may push consumers to make rushed decisions in a bid to get more money quickly.
“Adverts promoting cryptocurrency have become increasingly difficult to miss, often cropping up on social media platforms and even on public transport,” he said. “The worry is, at a time when many are seeking to shore up their finances amid the cost-of-living squeeze, people will be duped by misleading adverts to put money in these high-risk products which are simply not right for them.
“Cryptocurrencies are highly complex, volatile and, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
“Our research found that 45% of young adults aged between 18 and 29 are getting their first taste of investing through high-risk cryptocurrency – and an alarming number are funding this through a cocktail of credit cards, student loans, and other loans. The influence of cryptocurrency advertising cannot be understated here.
“Hopefully the ASA’s actions will help curb dubious and outright misleading adverts on cryptos. Adverts promoting cryptoassets with lofty promises to investors are coming under intense scrutiny.
“At the start of the year, the government set out a plan to legislate to address misleading cryptoassets promotions and bring them into line with other financial advertising. Greater regulation on the advertising of cryptos can’t come soon enough.”