On 8 October 2023 the FCA took over the regulation of ads for ‘qualifying cryptoassets’ – cryptoassets that are transferable and fungible, including cryptocurrencies and utility (fan) tokens – and introduced new rules. However, cryptoassets as a product remain unregulated. As of this date, complaints about misleading non-broadcast advertising for qualifying cryptoassets will be referred to the FCA for their consideration. The new rules do not cover cryptoassets that are non-fungible, such as Non-Fungible Tokens (NFTs), or Limited Payment Tokens that can only be redeemed with the issuer and used for the payments of specific goods and services, such as non-monetary customer loyalty points, and the ASA will continue to regulate all ads for these products.
Summary of Council decision:
Two issues were investigated, both of which were Upheld.
A Twitter page for Coinburp, a cryptocurrency trading platform, seen on 26 July 2021, included a bio section which stated “Register in minutes, deposit instantly, then make super-easy and secure crypto trades”.
The ASA challenged whether the ad was:
1. irresponsible because it took advantage of consumers’ inexperience or credulity; and
2. misleading because it failed to illustrate the risk of the investment.
1. & 2. CoinBurp Ltd t/a CoinBurp said that there was no intent to claim that investing in cryptocurrency was simple and for everyone. They explained the Twitter bio was worded in a clear and accessible way, to appeal to a wider audience who previously may have felt excluded from the cryptocurrency sector. In addition the claim “Register in minutes, deposit instantly, then make super-easy and secure crypto trades” accurately reflected their accessible and streamlined service.
They said that the term “super-easy” was conversational in tone, would be interpreted as puffery and not be taken literally by the average consumer. In addition consumers would understand the claim related to trading, which CoinBurp had made easier by their user-friendly and secure service, and not a trading decision, which the average consumer would understand came with risk.
Coinburp acknowledged consumers should be made aware of the risks of investing in cryptocurrency, including the possibility of taxable charges. However, the bio was not intended to be a comprehensive risk warning but a general introduction to their service and it included no comment or promise about returns on any investment. Coinburp believed an average user would understand that investments had tax implications and they did not believe that the lack of specific wording in that regard amounted to taking advantage of consumers as they had nothing to gain from an investor being ignorant of their tax position. Nevertheless they said they were to formulating appropriate wording to be added to their disclaimer to reflect that information in the future.
Coinburp stated that the Twitter bio would only be visible to users who clicked to access their page and therefore was not untargeted media. The individuals accessing the page were likely to already have some understanding of cryptocurrency and an interest in the area.
Coinburp believed that, because the bio was limited by time and space, and made no misleading claims, it was acceptable to include any qualification one click away. They said the 160 character restriction in the bio prevented them listing all risks but did direct consumers to the website and app. The website had a detailed and prominent disclaimer stating crypto was not regulated and capital was at risk. In addition potential risks were also highlighted when a user registered an account. CoinBurp said that the bio should not be considered in isolation but as part of their wider content. However, they said that they were subsequently looking to include appropriate wording within the Linktree landing page.
Coinburp said that while they believed the Twitter bio was responsible and accurate they had removed the claim “Register in minutes, deposit instantly, then make super-easy and secure crypto trades”.
The ASA acknowledged that for consumers to see the ad they had to directly click to the CoinBurp page, because it would not be visible in a general Twitter feed. However, while the act of clicking indicated an interest in CoinBurp and potentially cryptocurrency in general, it did not automatically mean that those consumers had more knowledge or experience with cryptocurrencies than the general public, who overall were likely to be inexperienced in their understanding of cryptocurrency.
We further noted CoinBurp’s comments that consumers would see the claim “Register in minutes, deposit instantly, then make super-easy and secure crypto trades” as relating to the ease of trading on their platform and not that trading decisions were easy. However, while the consumer experience on their platform may have been user friendly, cryptocurrency investment itself was still sophisticated and complex. In the absence of any other information in the ad or warnings to the contrary, we considered that consumers would interpret the claim to mean that investment in cryptocurrency in general was straightforward, effortless and suitable for anyone regardless of their personal circumstances and understanding of what they were investing in. That was emphasised by the term “make super-easy … crypto trades” that while informal in tone, still conveyed the impression that the process of trading cryptocurrency was simple.
We also understood that the general public would be unlikely to be aware that Capital Gains Tax (CGT) could be paid on cryptocurrency profits once annual tax free allowances were exhausted and we noted that the ad made no reference to tax. We acknowledged CoinBurp’s comment that the text limit for Twitter bios was 160 characters and the ad directed consumers to the CoinBurp website. However, while the website did contain qualification warning about the risks of cryptocurrency, it made no mention of the potential need to pay CGT on cryptocurrency gains.
For those reasons, we considered that the ad took advantage of consumers’ inexperience and credulity by not making clear tax could be paid on cryptocurrency profits and by irresponsibly suggesting that investing in cryptocurrency was straightforward and for everyone regardless of their personal circumstances and understanding of what they were investing in. That was particularly the case because the audience it addressed, were likely to be inexperienced in their understanding of cryptocurrencies. We therefore concluded that the ad was in breach of the Code.
On that point the ad breached CAP Code (Edition 12) rules 1.3 (Social responsibility), and 14.1 (Financial products).
The CAP Code stated that marketing communications must not mislead the consumer by omitting material information. Where a marketing communication was constrained by time or space, the measures that the marketer took to make that information available to the consumer by other means were relevant when considering whether it was misleading. We understood that cryptocurrencies were currently unregulated in the UK, and we considered that it was likely to be material to consumers to be made aware of that, as well as the fact that cryptocurrency could go down as well as up. We noted that there was nothing in the ad to make that clear.
We acknowledged that Twitter bios were limited to 160 characters and were therefore constrained by space. The bio contained a hyperlink to Linktree for Coinburp, which had 12 further links, with the first option being for the Coinburp website. It would have been possible to include a qualification in the image at the top of the Twitter page, or within the Linktree page. Although no qualification was included at the time the ad was seen by the ASA, we understood Coinburp were subsequently formulating appropriate wording that was to be added to its Linktree landing page.
We saw two versions of the website that was linked to from the Linktree page. Initially, it contained a static footer on a single screen that stated “Cryptocurrencies are only regulated in the UK for anti-money laundering purposes. Therefore the Financial Ombudsman Service or the Financial Services Compensation Scheme are not applicable to any cryptoasset activities carried out by CoinBurp Ltd. As cryptocurrency can be high risk, all investors should carefully evaluate their appetite for risk and their understanding of trading cryptoassets prior to entering into a transaction. Capital at risk.”Subsequently, the website was amended, and included the same text in the footer but it was not immediately visible and consumers would have to scroll a long way to the bottom of the page to locate it. We therefore considered it was likely to be missed.
Therefore because the ad, and the subsequent Linktree page, did not include any risk warning making consumers aware that cryptocurrency could go down as well as up, or that the cryptocurrency was unregulated in the UK. We concluded that the ad was misleading.
On that point the ad breached CAP Code (Edition 12) rules 3.1 and 3.3 (Misleading advertising), 3.9 (Qualification) and 14.4 (Financial products).
The ad must not appear again in the form complained about. We told CoinBurp Ltd to ensure that their future marketing communications did not irresponsibly take advantage of consumers’ lack of experience or credulity by implying that cryptocurrency investment was straightforward or accessible and that CGT was not due in some circumstances on cryptocurrency profits. We also told them to ensure that their future ads made sufficiently clear that the value of investments in cryptocurrency was variable and could go down as well as up and that cryptocurrency was unregulated.