The UK ad regulator is getting more and more suspicious of ads for high-risk cryptocurrencies as the industry waits for the Financial Conduct Authority to come up with new oversight powers.
On Tuesday, the Advertising Standard Authority (ASA) sent an enforcement notice to more than 50 UK businesses that promote cryptocurrencies. The notice set out the rules for these ads, including warnings against encouraging people to buy cryptocurrencies with their bank cards or trade their pensions for tokens like bitcoin.
The ASA has been trying to stop “misleading and irresponsible” crypto ads for a long time. This is the next step in the fight.
Nick Hudson, the operations supervisor for the ASA, said: “It’s a big step up.” This is a part of the economy that we think needs some work, and the government agrees.
Rishi Sunak, the chancellor, said in January that the government will try to change the law to give the FCA more power to regulate crypto asset promotions so that ads for digital assets would have to meet the same stricter rules as ads for other types of financial products. However, the ASA said it doesn’t expect the new system to be in place before 2023, and warned that people who aren’t honest could take advantage of the delay.
“We play a very important role right now.” Those who run ads know that the FCA regulation is coming down the road. It’s a time when they might want to make money. Hudson said this.
There is a lot of pressure on financial watchdogs all over the world because they want to bring digital assets under their control from the “wild west.” They are promoting high-risk crypto investments a lot. Read more; Crypto Airdrops, Swap A Valuation Hurdle
A study done by the FCA last year found that people who bought crypto after seeing ads were more likely to regret their decisions.
Regulators in Australia have filed a lawsuit against Meta, the owner of Facebook, over “scam celebrity crypto ads” that spread on the site. Meta said that it tries to stop scams, but it can’t talk about how the law works.
There are some countries that have taken a better, more durable path. Singapore this year banned almost all public transportation and social media influencer ads for crypto. Spain said it would require influencers to tell regulators about crypto posts before they go live.
Until the FCA gets its new powers, the ASA will be in charge of UK advertising. The ASA and the FCA will share responsibility for crypto when the FCA gets its new powers. Other industries that have been hit with ASA enforcement notices, like fertility treatments and prescription weight-loss medicines, are now in the same group.
The discovery comes after a series of rulings about crypto ads campaigns that the watchdog said broke UK advertising rules. This month, the company let Floki Inu, a token named after Elon Musk’s dog, be used in a series of ads on London’s public transportation. The ads “exploited consumers’ fears of missing out,” the Advertising Standards Authority (ASA) said.
Last year, the regulator told a lot of big crypto providers, like Coinbase and eToro, to stop using their ads. They also tried to stop the promotion of soccer team Arsenal’s “fan tokens.”
Cryptocurrency operators say they’ve tried to meet the new rules. Some blame third-party ad providers for not meeting the rules. Other companies have said that the rules for the ASA aren’t clear, or that the watchdog used new rules to apply to ads that were already running.
The ASA said that its enforcement notice combines the precedents from its previous rulings into a set of guidelines for the business. This is how you say it: The way they should be advertising is “very, very clear” now, says Hudson.
ASA director Miles Lockwood praised some crypto companies for quickly changing their ads to be in line with the ASA’s rules. A lot of these businesses are already meeting the rules, the man said.
The notice starts a six-week countdown to a deadline, at which point crypto businesses that don’t follow ASA rules will face more strict enforcement measures. These include working with ad providers to stop non-compliant advertising, or, in the end, taking legal action against businesses that don’t follow the rules of the game. Read also; Coinbase Facing Lawsuit Over Unlicensed Crypto Asset Sales
Companies will be under more scrutiny when the federal government makes good on its plan to give the FCA the power to stop most cryptocurrency ads. People who invest in more mainstream things like stocks and funds are subject to the monetary regulator’s rules, which require that ads be approved by an FCA-regulated agency before they can be shown, and they face harsher penalties for breaking them, as well.
A crypto business group called Global Digital Finance wrote to the Treasury on Saturday saying that new rules were “unfairly harsh” on the crypto asset industry because most crypto companies aren’t approved by the Financial Conduct Authority. This means that they have to get help from other financial institutions in order to stop their ads.
People who work for the CryptoUK group say the business “wants to be compliant,” but that the new rules are “in effect a complete ban on crypto ads.”