March 28, 2022
The ASA’s Enforcement Notice has been issued to over 50 companies that advertise cryptocurrencies. It instructs them to review their ads and to ensure they understand and are complying with the rules so that consumers are treated fairly. The Enforcement Notice provides guidance to the crypto industry on how to stick to the rules and warns that the ASA will monitor for compliance and implement sanctions if it does not see improvements. The guidance requires that advertisers:
- clearly state that cryptocurrencies are unregulated in the UK and that the value of investments are variable and can go down;
- must not state or imply that investment decisions are trivial, simple, easy or suitable for anyone; and
- must not imply a sense of urgency to buy or create a fear of missing out, or that investments are “low risk”.
The digital currency known as cryptocurrency uses encryption techniques to regulate how many units of currency are available and is subject to frequent changes in value. The ASA says that because most people do not fully understand how cryptocurrencies work, how volatile they can be or how they are not regulated, there is a real risk that people may lose money.
The ASA says that this is a “‘red alert’ priority issue”; in fact, it has recently banned several crypto ads for misleading consumers and for being socially irresponsible. The Enforcement Notice continues the ASA’s work in clamping down on problem crypto ads. As part of this, the regulator is working closely alongside the Financial Conduct Authority (FCA) to take action against those who appear unable or unwilling to abide by the rules.
The Enforcement Notice applies 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 that are targeted globally on behalf of UK-based advertisers.
The ASA’s Compliance Team will conduct follow-up monitoring and if problem ads persist after 2 May 2022, it will take targeted enforcement action to ensure a level playing field. This will include non-compliant advertisers being reported to the FCA. To read the ASA’s announcement in full and for a link to the Enforcement Notice, click here.