Towards the end of last year the Advertising Standards Authority (ASA) published a statement on crypto-assets, categorising crypto-asset advertising as a "red alert" priority issue. This comes following various rulings regarding advertisements breaching the CAP and BCAP Codes.
The ASA have put the onus on advertisers to ensure consumers understand the risks involved in investing in crypto-assets. The ASA is mainly concerned with advertisers who:
- Do not provide appropriate risk warnings.
- Trivialise investments in cryptocurrency.
- Appear to be taking advantage of consumers’ inexperience or incredulity.
- Are irresponsible with their advertising (for example, creating a sense of urgency to invest).
The latest ASA statement builds on a previous ASA article, “Digital Gold, Cartoon Dogs and the Moon – Advertising Cryptocurrencies”, which outlined steps businesses should take to ensure they are complying with the advertising codes in the crypto space. Advice included:
- Make it clear that cryptocurrencies are not regulated by the FCA.
- Make it clear that the value of an investment can decrease instead of increase.
- Ensure the advertisement can be understood by the audience (this requires considering the audience for a particular advertisement).
Given the approach to regulation in the crypto space it is perhaps unsurprising that the ASA has chosen to step up its guidance on how to comply with the CAP and BCAP codes. But whilst advertisers in this space may welcome greater certainty on how the rules apply, the statements from the ASA are all in general terms and still include subjective elements, which ultimately are likely to be decided by a body (the ASA) with limited specific crypto regulatory expertise. For example, what is actually meant by "trivialising" an investment in this space remains in the hands of the ASA to determine rather than any more qualified body.
This is as much a feature of the advertising regulatory regime though as it is a symptom of the regulatory regime that applies to crypto-assets. Nonetheless it remains the case that when proofing an advertisement in this space, businesses should always bear in mind the CAP and BCAP codes (as may be relevant), and there is a risk of further sanction if they do not. In particular, it may be worth advertisers considering how the approach they take is defensible in view of the more subjective elements of the ASA guidance.
If you would like to discuss any of the issues raised by this article, do not hesitate to contact our commercial team or your usual Stevens & Bolton contact.