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Emily Nicolle
The U.K.’s advertising regulator sent an enforcement notice to more than 50 companies that have promoted cryptocurrencies ahead of an impending clampdown on “misleading and irresponsible crypto ads” in the country.
The Advertising Standards Authority said the is meant to serve as a warning for businesses to review and clean up their ads over the next two months, after which tougher measures will be introduced to penalize rule breakers.
Regulators globally have sought to crack down on crypto ads, which have skyrocketed as digital assets gained mainstream appeal. Governments and watchdogs in the U.K., Singapore and Spain promised to tighten rules on crypto ads earlier this year, including by restricting such promotions to target only wealthy investors — though Britain has yet to set a time line for enshrining that change into law.
Guidance in the ASA’s enforcement notice, issued on Tuesday, said all promotions should clearly and prominently state that cryptoassets are unregulated in the U.K., that any profits may be subject to Capital Gains Tax and that the value of crypto investments can go down as well was up. This includes ads in press and magazine outlets, TV, emails, outdoor posters, in promoted social media posts and via paid agreements with influencers.
All ads running between now and May 2 will be monitored for compliance, the ASA said, followed by “targeted enforcement action” for problems persisting after that date. This will include reporting repeat offenders to the Financial Conduct Authority, as well as to Trading Standards, which has the ability to prosecute, issue fines and ultimately stop companies from trading.
A spokesperson for the ASA declined to name any of the companies that received the enforcement notice, but pointed to recent rulings it had made against firms running crypto ads in the U.K. Those firms include COINBASE Europe Ltd, Arsenal Football Club and eToro’s U.K. arm as well as Floki Ltd., which ran ads in support of the joke cryptocurrency Floki Inu.
“Crypto has exploded in popularity in recent years,” Guy Parker, chief executive of the ASA, said in a statement. “We’re concerned that people might be enticed by ads into investing money they can’t afford to lose, without understanding the risks.”
The FCA and ASA have jointly faced criticism for allowing enforcement against misleading crypto ads to fall between the cracks, with sanctions left in a gray area between the two bodies’ respective jurisdictions.
The ASA made cryptoassets a “red alert” priority in November, noting a rise in concerns about ads for cryptocurrencies, utility tokens and nonfungible tokens. Its enforcement notice comes in the context of changes to the U.K.’s draft Online Safety Bill, which was expanded to require social media platforms and search engines to prevent paid-for scam ads earlier this month.
Meanwhile the FCA is embroiled in industry tension over its own regulation of cryptoasset businesses, with some 18 crypto firms still awaiting word on the status of their applications to move from the watchdog’s temporary cryptoasset register toward full authorization. Major firms including digital bank Revolut Ltd. and crypto brokerage Copper Technologies Ltd. face having to halt their crypto operations if they do not gain approval before the FCA’s authorization deadline of March 31.
“We will continue to work closely with the ASA to tackle unclear or misleading crypto advertising,” said Sarah Pritchard, the FCA’s executive director of markets, in a statement attached to the ASA’s enforcement notice. “Those who invest in cryptoassets should be prepared to lose all their money.”
