ASA cracks down on crypto ads

As made clear in its November 2021 statement and subsequent ban of seven crypto ads in December, cryptoasset advertising is a ‘red alert’ priority issue for the ASA. It is perhaps unsurprising then that the ASA recently followed up with robust guidance on how cryptoassets should be advertised to consumers.

The key points of the advice are as follows:

Make clear they are not regulated

Advertisers must clearly state that cryptoassets, such as cryptocurrency, are not regulated. The statement must be presented in a sufficiently clear and prominent way to ensure it can be seen by consumers.

A digital poster for an online cryptocurrency exchange that ran a risk warning for one second at the start of a 20 second advert did not give consumers enough time to comprehend the disclaimer and was therefore not sufficiently clear.

Do not take advantage of consumers’ inexperience or credulity

Financial product advertisements must be set out in a way that allows them to be easily understood by the audience being addressed (CAP Code rule 14.1). Marketers should consider where the ad is to be placed and what terminology is used. For cryptoassets in particular, the terminology will be new to the majority of consumers.

An ad which offered free Bitcoin with the purchase of pizza was deemed to encourage consumers to engage in high risk investments without consideration and trivialised a serious financial decision. This was especially true in the context of the intended audience, who would likely have limited knowledge of cryptocurrency. The ASA also ruled against multiple ads which did not clearly state that Capital Gains Tax (CGT) may be payable on profits.

Include all material information

Adverts must not mislead consumers by omitting material information (CAP Code rule 3.3).

An ad for ‘Fan Tokens’ did not mention that the tokens were a cryptoasset or that they required cryptocurrency to purchase.

Make clear that the value can go down as well as up

Adverts must make clear that the value of investments is variable and can go down as well as up (CAP Code rule 14.4). Cryptocurrencies can be extremely volatile and are therefore vulnerable to drastic changes in value.

There have been several instances of adverts which did not state that cryptocurrency investments were variable. These advertisers were later instructed by the ASA to include a statement that made this clear.

State the basis used to calculate any projections or forecasts

The basis used to calculate a rate of interest, forecast or projection must be immediately apparent (CAP Code rule 14.3).

An advert which claimed an investor could “Earn up to 8.5%” was challenged. The ad did not make clear that the rate of return depended on the type of cryptocurrency, the amount transferred and the period held, and no evidence was provided to substantiate the figure. The basis of any projection must be clear and advertisers should hold adequate substantiation to support their claims.

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

Adverts should make clear that past performance does not necessarily give a guide for the future (CAP Code rule 14.5).

The claim ‘…£5 in #Bitcoin in 2010 would be worth over £100,000 in January 2021. Don’t miss out on the next decade…’ was deemed to use past performance of Bitcoin to encourage consumers to use the service. The advert did not make clear that past performance is not a guide for future performance and was therefore misleading.