Note: This advice is given by the CAP Executive about non-broadcast advertising. It does not constitute legal advice. It does not bind CAP, CAP advisory panels or the Advertising Standards Authority.


Cryptoassets are complex and volatile products that are also becoming increasingly popular and widespread in the UK.  Because of the risks and complexities involved, advertisers of cryptoassets must take particular care to ensure they do not mislead consumers and are not socially irresponsible in the way they promote them.

What is a cryptoasset?

Regulation of cryptoassets

Make clear that cryptoassets are unregulated and not protected

Do not take advantage of consumers' inexperience or credulity

Include all material information

Make clear that value can go down as well as up

State the basis used to calculate any projections or forecasts  

Make clear that past performance is not a guide for future performance

What is a cryptoasset?

Cryptoassets are defined by the Financial Conduct Authority (FCA) as: “cryptographically secured digital representations of value or contractual rights that use some type of distributed ledger technology (DLT) and can be transferred, stored or traded electronically.” There are a number of different products that fall under the umbrella term of “cryptoassets”.

Cryptocurrencies are probably the most well-known and longest established form of cryptoasset. A cryptocurrency is a digital currency, which uses encryption techniques to regulate and limit how many units of currency are available. Cryptocurrencies use methods such as “blockchain” to verify the transfer of funds, whilst operating independently of a central bank. The most well-known cryptocurrency is Bitcoin along with Ethereum, Ripple, Bitcoin Cash, Litecoin, and EOS, but there are now over 1,500 in existence.

Utility tokens are a form of cryptoasset that can be used within a specific ecosystem. These tokens allow users to perform some actions on a certain network and is unique to its ecosystem and are linked to cryptocurrencies because they use DLT and are sometimes acquired through the prior purchase of a cryptocurrency. These tokens can be used to create incentive schemes enabling people to perform unique actions within the ecosystem.  “Fan tokens” used by sports clubs are a form of utility token.

Non-fungible Tokens (NFTs) are a digital certificate of authenticity that certifies the uniqueness of a certain digital asset, like a piece of digital art. NFTs are linked to cryptocurrencies because they use DLT and are also generally acquired through the prior purchase of a cryptocurrency. It is important to remember that the NFT is not the piece of art or image itself, but a method of tracking ownership. If somebody sells you an NFT for a digital file, that does not stop them sending copies of that file to other people.

Regulation of cryptoassets

The vast majority of cryptoassets, such as cryptocurrencies are not currently regulated by the Financial Conduct Authority (FCA) and do not fall under the umbrella of financial compensation schemes such as the Financial Services Compensation Scheme (FSCS) or the Financial Ombudsman Service (FOS). As such, the FCA currently does not exercise powers over advertising of most cryptoassets products in the UK.

However, where cryptoassets are traded on existing regulated platforms, such as Contract for Difference (CFDs), they fall under the FCA’s remit. The FCA announced that due to their complexities and volatility, the sale of regulated products such as any derivatives (for example,  CFDs, options and futures) that reference certain types of cryptoassets are banned to retail consumers.

In 2022 the government announced plans to strengthen the rules on some forms of cryptoassets to protect consumers from misleading claims by bringing them into regulation by the FCA.. The timescales for this work have not yet been determined but is not expected to take effect before 2023.

In the meantime, all unregulated cryptoassets will continue to be subject to the Advertising Code.  Following the date on which the FCA takes on responsibility for regulation most forms of cryptoassets the ASA will nevertheless continue to retain oversight of issues of responsibility across all forms of cryptoasset advertising. Note also that NFTs are excluded from the Government’s announced changes  and will therefore remain under the remit of the Advertising Code for issues of both misleadingness and responsibility once these regulatory changes have taken effect.

Make clear that cryptoassets are unregulated and not protected

Advertisers must clearly state that cryptoassets are not regulated by the FCA. Ads must also make clear that cryptoassets are not protected by financial compensation schemes, so that potential investors are aware that they would not be subject to protections afforded by either FOS or the FSCS.

In 2021 the ASA investigated multiple ads for cryptocurrencies which did not make it clear that the product was not regulated or protected in the UK, and ruled that these ads should have included a statement which made this clear. (Skrill Ltd, 15 December 2021/ Luno Money Ltd t/a Luno, 15 December 2021/ Exmo Exchange Ltd, 15 December 2021/ CoinBurp Ltd, 15 December 2021/ Coinbase Europe Ltd t/a Coinbase, 15 December 2021/ eToro (UK) Ltd, 15 December 2021).
 

Advertisers must make sure that this statement is presented in a sufficiently clear and prominent way, ensuring that it is legible and can be easily seen by consumers. When considering whether this information is sufficiently clear the ASA are likely to consider the size and legibility of the text, its positioning in the ad, and the nature of the medium.   

In 2021, the ASA investigated a digital poster for an online cryptocurrency exchange, which included a disclaimer which referred to cryptocurrencies being unregulated activities in the United Kingdom. However, as the risk warning only ran for one second at the beginning of a 20-second ad, the ASA considered that the presentation and brevity of the disclaimer, would not give consumers necessary time to comprehend the disclaimer in full (Payward Ltd t/a Kraken, 15 December 2021).

Do not take advantage of consumers' inexperience or credulity

Code rule 14.1 states that financial products must be set out in a way that allows them to be understood easily by the audience being addressed. Therefore, marketers should think about where an ad is to be placed and the terminology that is used. For example, if an ad is placed in a specialist financial publication, then more technical jargon may be able to be used, than if an ad is placed in an untargeted medium such as an outdoor poster. As these are fairly new, and are unique, a lot of the terminology will be new to the majority of consumers and could well be confusing and therefore potentially misleading.

In 2019, the ASA received complaints about a press ad for investing in cryptocurrency and focused on the value of Bitcoin as the complainants felt the ad failed to illustrate the risk. The ASA told the advertiser to ensure that financial information in their ads was set out in a way that allowed it to be readily understood by the audience being addressed and that the risks of investments were sufficiently clearly signposted (HDR Global Trading, 14 August 2019).

In 2022, the ASA challenged whether an ad for cryptocurrency which featured a cartoon dog was irresponsible. The ASA acknowledged that the cartoon dog, who was wearing a Viking helmet, was the company logo, and that many cryptocurrencies have their origin in humour and memes. However, they considered that the use of cartoon imagery gave the impression that purchasing cryptocurrency was a light-hearted and trivial matter, and distracted consumers from the seriousness of an investment which was volatile and unregulated. 

A second challenge was made about the accompanying claim “MISSED DOGE. GET FLOKI” and whether this statement exploited consumers' fears of missing out. The ASA eventually ruled that the ad implied it was necessary for consumers to purchase Floki immediately to make a significant profit and prevent them from missing the next big crypto investment. As a result, the ad was upheld on both points – trivialising investment, and exploiting consumers fears/incredulity (Floki Inu, 2 March 2022).

The ASA investigated an ad for a promotion which offered free Bitcoin with the purchase of pizza, which required participants to open a trading account. The ASA considered the use of pizza to promote a cryptocurrency account, encouraged consumers to engage in a high-risk investment without consideration and trivialised what was a serious and potentially costly financial decision, especially in the context of the intended audience who were likely to have limited knowledge of cryptocurrency. Therefore because the ads took advantage of consumers’ inexperience or credulity and trivialised investment in cryptocurrency, the ASA concluded that they were irresponsible and breached the Code (Papa John's (GB) Ltd t/a Papa John's Pizza, 15 December 2021).

The ASA has ruled against multiple ads which did not make clear that Capital Gains Tax (CGT) had to be paid on profits from investing in cryptoassets, once allowances were exceeded. In these cases, the ASA considered that, by not making clear that CGT could be payable on profits from investing, the ads took advantage of consumers’ inexperience or credulity (eToro (UK) Ltd, 15 December 2021/ Arsenal Football Club plc, 22 December 2021/ Exmo Exchange Ltd, 15 December 2021/ Luno Money Ltd t/a Luno, 15 December 2021 / Payward Ltd t/a Kraken, 15 December 2021 / CoinBurp Ltd, 15 December 2021/ Coinbase Europe Ltd t/a Coinbase, 15 December 2021/ Forisgfs UK Ltd t/a Crypto.com, 5 January 2022).

Include all material information

As well as the rules in Section 14 of the CAP Code, other sections of the Code will be relevant. The rules in Section 3 of the CAP Code cover misleading advertising.

In line with rule 3.3, ads must not mislead consumers by omitting material information.

An ad for ‘Fan Tokens’ did not mention that Fan Tokens were a cryptoasset or that to buy them you had to first purchase another cryptocurrency. Therefore, the ASA considered consumers were unlikely to understand that the ad referred to cryptoassets. As the ad did not include material information that Fan Tokens were a cryptoasset that had to be exchanged with another cryptocurrency, the ASA concluded the ad was misleading (Arsenal Football Club plc, 22 December 2021).

Make clear that value can go down as well as up

Cryptocurrencies (and investments linked to their performance) can be extremely volatile which means they are vulnerable to dramatic changes, so whilst they may go up significantly in value, they could also severely drop meaning a loss of capital.

Code rule 14.4 states that ads must make clear that the value of investments is variable and, unless guaranteed, can go down as well as up.

The ASA has investigated multiple ads for cryptocurrencies that did not state that investments were variable and that they may go down in value as well as up, and told the advertisers to ensure that their ads included a statement which made this sufficiently clear (Skrill Ltd, 15 December 2021/ Luno Money Ltd t/a Luno, 15 December 2021/ Exmo Exchange Ltd, 15 December 2021/ CoinBurp Ltd, 15 December 2021/ Coinbase Europe Ltd t/a Coinbase, 15 December 2021/ eToro (UK) Ltd, 15 December 2021/ Payward Ltd t/a Kraken, 15 December 2021/ Arsenal Football Club plc, 22 December 2021).

State the basis used to calculate any projections or forecasts

Sometimes ads will state forecasts or projections for returns consumers may be able to achieve. Code rule 14.3 states that the basis used to calculate any rate of interest, forecast or projection must be apparent immediately.

In 2021 the ASA challenged if the claim “Earn up to 8.5%” in an ad was misleading and could be substantiated. The ASA considered that the ad did not make clear that the rate of return depended on the type of cryptocurrency, the amount transferred, or the period held and had not seen any evidence to substantiate that 8.5% per year would be paid. The ASA told the advertiser to ensure that the basis of any projection in their ads was made clear and that they held adequate substantiation to support their claims (Forisgfs UK Ltd t/a Crypto.com, 5 January 2022).

Make clear that past performance is not a guide for future performance

Code rule 14.5 states that ads should make clear that past performance or experience does not necessarily give a guide for the future.

The ASA investigated an ad which stated ‘…£5 in #Bitcoin in 2010 would be worth over £100,000 in January 2021. Don’t miss out on the next decade…’, and considered that this claim used the past performance of Bitcoin to encourage consumers to use the service.  Because the ad did not make clear that past performance or experience did not necessarily give a guide for the future, the ad was found to be misleading (Coinbase Europe Ltd t/a Coinbase, 15 December 2021).


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