Cryptoassets are increasing in popularity and so we are seeing lots more advertising in this area. If you are advertising these types of products, it is important to be familiar with the Code rules.
The ASA has recently issued a statement and a number of rulings in this area, so here are some tips to ensure future ads are compliant. We have also updated our Advice Online article on cryptoassets taking these rulings into account. The article outlines the various cryptoassets types – cryptocurrencies, utility tokens and non-fungible tokens (NFTs) – that are available.
Cryptoassets aren’t regulated
Although cryptoassets are becoming more well-known, including the famous cryptocurrency, Bitcoin, these products are not regulated by the Financial Conduct Authority (FCA), which people may not be aware of. As these products are unregulated, consumers are also unable to go to the Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS).
Therefore, all ads should make clear that cryptoassets are not regulated. 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.
Make clear that value can go down as well as up
Cryptoassets (including cryptocurrencies) can be volatile, which means they are vulnerable to dramatic changes, so whilst they may go up significantly in value, they could also severely drop, resulting in a loss of capital. Ads should state that the value can go down as well as up.
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. Marketers should consider who might see their ads when thinking about what language to use. These products are fairly new and unique, and therefore it is likely that a lot of the terminology will be new to many consumers. If placed in untargeted media, such as out of home posters, this could be confusing to those who are unfamiliar with the products, and therefore potentially misleading.
Past performance is no guarantee of future earnings
Although some people have made money investing in cryptocurrencies, they are volatile investments which can depreciate in value very quickly. Often the value of cryptocurrencies can fall even faster than it rises. Code rule 14.5 states that it must be made clear that past performance is not a guide for the future. Ads must make the basis of any forecast or projection apparent immediately and must not misrepresent any past performance.
Other things to consider
Marketers who want to advertise cryptocurrency products should familiarise themselves with the Financial products section of the CAP Code. Further guidance on advertising cryptoassets is available here.
If you would like bespoke advice on your non-broadcast advertising, the Copy Advice team is here to help.