The Advertising Standards Authority (ASA), the UK’s advertising regulator, recently published a statement on its website, announcing its plans for increased regulatory activity in the marketing of cryptocurrencies and Non-Fungible Tokens (NFTs). In the words of the ASA, the matter is a ‘red alert’ priority issue for the organisation.
The ASA’s approach: providing guidance through rulings
The short statement highlights the importance of the regulator’s role in preventing misleading and irresponsible advertisements. The ASA shed light on the fact that it’s currently investigating “a number of” crypto-asset marketing materials across several platforms, for a number of possible violations, including:
- lack of appropriate risk warnings to the public;
- the trivialisation of investments in cryptocurrency;
- taking advantage of consumers’ inexperience or incredulity in the subject matter;
- irresponsible advertising (for example, creating a sense of urgency to invest).
The Authority, which expects to publish its decisions on these ongoing investigations in mid-December, hopes to provide clarity around its expectations to promoters and marketers in the cryptocurrency and NFT space through these rulings.
ASA’s crypto enforcement history
This is not the first time the ASA has issued warnings over the advertising of crypto-assets, with the regulator issuing pieces of guidance on the subject earlier in December 2020 and April 2021.
The upcoming decisions will not be the first instances of enforcement action in this space either. In a 2019 ruling, the ASA forced the cryptocurrency trading platform BitMEX to pull an advertising campaign that breached the CAP Code (the formal set of rules enforced by the Authority) by containing misleading advertising, exaggeration and insufficient information on financial products.
In a subsequent decision earlier this year, the cryptocurrency exchange Coinfloor fell foul of the CAP Code by running an advert encouraging people to invest their pensions into Bitcoin. In this case, the ASA went further than its BitMEX decision and ruled that Coinfloor breached its social responsibility obligations under the CAP Code.
Is non-compliance an option?
While the ASA cannot impose monetary sanctions on non-compliant advertisers, the Authority can (and does) refer uncooperative marketers to Trading Standards – the government body for protection against unfair trading. They, in turn, have the powers to impose a wide range of sanctions, including monetary fines and, in some extreme cases, to make a referral to the Crown Prosecution Service for a criminal investigation. Accordingly, ASA rulings and guidelines should be taken very seriously by advertisers who must ensure they remain compliant with the rules.
DAC Beachcroft’s Technology and Media lawyers advise some of the world’s leading businesses in this sector. Our team has a breadth of expertise in the cryptocurrency and NFT advertising space and will provide further insights on the issue after the ASA publishes its ruling in December.
For more information on our cryptocurrency and NFT legal advisory offering, or in respect of advertising law and regulation, please contact Tim Ryan or Kelsey Farish
