The Advertising Standards Authority (ASA) has indicated it will crack down on misleading marketing for cryptocurrency investments, particularly those that don’t accurately convey the high-risk nature of these investments.
Miles Lockwood, director of complaints and investigations at ASA, told the Financial Times: “We see this as an absolutely crucial and priority area for us. Where we do find problems we will crack down hard and fast.”
Lockwood said the agency has identified crypto as a “red alert” priority and that companies will be issued with warnings and may be required to include disclaimers on their advertisements. Influencers promoting cryptocurrencies on social media will also face greater scrutiny by the ASA.
In May, the ASA criticised crypto app Luno for a recent ad campaign on London public transport featuring billboards that said: “If you’re seeing Bitcoin on the Underground, it’s time to buy.” The watchdog received three complaints about the campaign, on the grounds that it was misleading about the risks involved and took advantage of consumers’ lack of knowledge about cryptocurrencies.
Most crypto investments aren’t covered under Financial Conduct Authority (FCA) rules around advertising financial products, which means the responsibility of regulating crypto advertising has largely fallen on the ASA. The FCA has issued warnings that those investing in cryptocurrencies “should be prepared to lose all their money”, but these warnings have not been widely viewed by consumers. It is also working closely with the Treasury on the proposals to extend its powers.
FCA research has found that although only a minority of people buy digital coins based on advertising, those that do tend to have worse outcomes. “Consumers who are persuaded by adverts are much more likely to regret their purchase,” said the FCA. It also found that people who bought based on ads were more likely to believe that crypto investments were protected by financial regulations, which is not the case.
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