Britain’s Advertising Standards Authority has issued enforcement notices to more than 50 cryptocurrency firms, which could be sanctioned if they don’t clean up their act.
Regulators have issued repeated warnings about ‘misleading’ and ‘irresponsible’ crypto ads, which have become common place online, as well as on some public transport networks
The ASA described the issue as ‘a red alert priority’ on Tuesday, with the regulator working closely with the Financial Conduct Authority and having already taken action to ban several crypto ads.
It told the 50-plus firms to review their crypto ads and ‘ensure they understand and are complying’ with advertising rules so that consumers are treated fairly.
This tube advert from crypto exchange service Luno was banned by the ASA last year for failing to mention the risk of Bitcoin investments and taking advantage of consumers’ inexperience in the sector
In December, the ASA uphelp complaints about platform Luno’s adverts, which appeared on the Tube last year, stating: ‘If you’re seeing Bitcoin on the Underground, it’s time to buy.’
In December, crypto exchange Coinbase was sanctioned for a paid-for Facebook ad, which included the text: ‘£5 in #Bitcoin in 2010 would be worth over £100,000 in January 2021. Don’t miss out on the next decade – get started on Coinbase today.’
The ad was found to be both misleading and irresponsible, and was therefore banned.
Paypal also recently faced criticism for sending customers adverts encouraging them to invest in volatile cryptocurrency.
At the start of the year, a plan was set out to address misleading cryptoassets promotions and bring them into line with other financial advertising.
ASA rules state that advertisers should clearly state that cryptocurrencies are unregulated in the UK and that the value of investments are variable and can go down
They also must not state or imply that investment decisions are ‘trivial, simple, easy or suitable for anyone’, or manufacture ‘FOMO’ by implying a sense of urgency to buy.
The ASA said its compliance team will conduct follow-up monitoring of the firms concerned, and if problem ads persist after 2 May it will take ‘targeted enforcement action to ensure a level playing field’.
Chief executive Guy Parker added: ‘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.’
Cryptoassets have proved hugely popular amongst traders and even many traditional investors have dabbled with small parts of their portfolios, but they are hugely volatile – with even the largest and best known bitcoin seeing extreme swings compared to most share prices.
Cryptocurrencies have faced mounting regulatory and political scrutiny in recent years amid fears of fraud, money laundering and scam activity.
The assets have faced even more pressure from global financial regulators in recent weeks, over concerns digital assets could be used to evade Western sanctions on Russia.
Earlier in March, it was revealed that US President Joe Biden is preparing to sign an executive to regulate cryptocurrency to limit sanctions evasion.
Just yesterday, it emerged that cryptocurrency regulations in Australia could be completely overhauled under a series of proposed reforms set out by the country’s government.
The Australian government is now wanting to devise a ‘framework’ for Australians and businesses operating in the market.
Senior personal finance analyst at interactive investor Myron Jobson said: ‘Adverts promoting cryptocurrency have become increasingly difficult to miss, often cropping up on social media platforms and even on public transport.
‘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 per cent 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.’