ASA issues advice on #Crypto #Ads

At the tail end of last week the ASA published new guidance on non-broadcast advertising for crypto-assets (see here for more detail). The guidance comes on the back of a spate of findings that a number of crypto-asset ads failed to comply with the CAP Code and after the ASA declared crypto-asset advertising as a "red-alert priority issue" back in November 2021 (see here).

The guidance provides a helpful explanation of what the term "crypto-assets" covers and provides a useful overview on the current state of play for the financial regulation of crypto-assets.  From an advertising standpoint, the advice sets out guidance on the ASA's expectations for crypto-asset ads to comply with the CAP Code.

The key takeaways for advertisers are as follows:

Clarity on regulation – Advertisers must clearly state that crypto assets are not regulated by the FCA and are not protected by financial compensation schemes - this information should be presented in a clear and prominent way that is legible and can be easily seen by consumers.

Clarity on financial information and risk – Financial information should be presented to consumers in a way that can be readily understood and the risks of investment should be clearly signposted. Ads should also avoid misleading consumers by failing to include material information, including the fact that the product being advertised is a crypto-asset.

Be transparent on volatility – In a number of rulings the ASA has made it clear that the Crypto-asset ads include a statement which makes it explicit that the value of crypto-assets can go down as well as up.

• Where an ad includes a forecast for potential returns the basis used to calculate the forecast should be immediately apparent from the ad and advertisers will need to be able to substantiate the forecast.
• Ads should also be clear that past performance (which could provide the basis for a future forecast) is not necessarily provide a guide for future performance.  Any ads that fail to make this clear and refer to past performance may be considered misleading.

Avoid exploiting consumer inexperience – Ads should not take advantage of consumer inexperience or lack of knowledge, for example by trivialising the risk of investments.  Advertisers should also be cautious about seeking to exploit consumers' “fear of missing out”. The nature of the crypto-assets should be easily understood from the content of the ad and advertisers should pay close attention to the language used to ensure the assets are explained in a way that is straightforward for consumers to understand.

Crypto-asset advertising is evidently a hot topic for the ASA and understandably so, particularly with the rapid rise of NFTs putting crypto-assets firmly in the broader public consciousness.  Whilst the guidance is not exhaustive and does not bind the ASA, advertisers should consider the advice carefully to understand how they can take steps to ensure ads do not mislead and do not promote crypto-assets in a socially irresponsible way.