The UK’s Advertising Standards Authority has revealed the extent of its recent crackdown on claims made by cryptocurrency services.
Digital asset exchange Crypto.com felt most of the ASA’s wrath with a total of 13 breaches – six of which were for ‘misleading advertising’, with the rest falling foul of guidelines surrounding financial products, qualification, social responsibility and substantiation.
Premier League Football club Arsenal were also dragged under the ASA’s watchful eye, accounting for a total of nine breaches.
The Gunners were rebuked over two adverts for the Arsenal fan token which, ruled the authority, was promoted through misleading advertising.
Cryptocurrency exchange Coinbase received warnings over 12 breaches – half of them for ‘misleading advertising’.
Compiling the lengthy list of misdemeanours, researchers at Crypto Head discovered the most common type of advertising breach was ‘misleading advertising’ with 44 breaches made by crypto ads. This terminology refers to instances where an advertisement misleads the viewer by either suggesting things that are untrue, or leaving out information that is crucial in order for the viewer to form a balanced opinion.
This was followed by ‘financial products’ and ‘qualification’ with 29 and 16 breaches respectively. A frequently-occurring example of financial products violations is that many of these crypto ads failed to mention the tax implications of investing in crypto, which is a breach of regulations as profits may be subject to capital gains tax (CGT).
The Crypto.com advertising ban referred to two separate advertisements for trading platform seen on the Daily Mail app and the Love Balls app. These ads initially fell foul of regulators because they did not state that cryptocurrencies were not regulated in the UK and that values could go down as well as up. This was deemed to be an issue as they were placed on apps where the audience was not necessarily expected to be informed about cryptocurrency.
“The omission of information regarding CGT was also an issue for regulators, as was the statement “Buy Bitcoin with credit card instantly”, as crypto purchases on a credit card could be subject to higher cash interest rates, could be subject to advance fees, and may impact your credit rating which would affect your future borrowing ability,” the research report stated.
“One of the ads also claimed that investors could ‘Earn up to 3.5% pa’ which increased to ‘Earn up to 8.5% pa’. The issue here is that no information was given for the type or length of crypto investment required to make these profits, while there was also no evidence that 8.5% would be paid. This meant the advert also breached the codes of misleading advertising, substantiation and financial products.”
In the case of Arsenal Football Club’s breaches, the advertisements were banned because they did not make it clear to the audience that they would need to make an account on sports crypto app Socios, or that they would need to purchase these tokens using another cryptocurrency.
“Regulators also found that these advertisements did not adequately inform potential investors of the risks of investing in crypto, that they are an unregulated asset, or that CGT may be payable on any profits,” the report explained.