UK Government the Latest to Strengthen Crypto Ad Promotions

The British government is the latest country to strengthen rules around the advertising of crypto-assets as it aims to legislate against misleading promotions. In the same week that Spain issued stronger guidelines around cryptocurrency advertising and Singapore banned their promotion to the public, in Britain new rules will be introduced with the aim of protecting consumers. According to the government’s announcement on the new rules, around 2.3 million people in the U.K. own a crypto-asset despite a lack of understanding of what they have bought, increasing the potential that such products can be “mis-sold”. Firms that wish to promote such investments and activities must comply with binding rules that financial promotions must be fair, clear, and not misleading.Rishi Sunak, Chancellor of the exchequer The government has said its plans to place such advertising under the legislation of the Financial Conduct Authority (FCA), bringing it in line with standards held around the promotion of other financial promotions, such as insurance, stocks and shares. The need for consumer protection Describing crypto-assets as “exciting new opportunities” for investment, the British chancellor of the exchequer, Rishi Sunak said in a statement that it was “important that consumers are not being sold products with misleading claims.” He explained the need to provide protection but also to support innovation within the crypto-asset market too, but said that—following research undertaken by the FCO around misleading ads promoting crypto-products—it was clear there was “potential” to cause consumer harm. Spain and Singapore Tighten Cryptocurrency Promotion Rules Sunak said that measures will include new legislation being introduced around investments and activities—bringing it under the Financial Services and Markets act of 2000, which prevents businesses from promoting financial products without authorization by the FCA or the Prudential Regulation Authority (PRA). “Firms that wish to promote such investments and activities must comply with binding rules that financial promotions must be fair, clear, and not misleading,” he added. A consultation will be led by the FCA around proposed financial promotions rules that will apply to the crypto sector. Reaction to the new regulation plans The move follows the Advertising Standard’s Authority (ASA) highlighting growth in cryptocurrency advertising, especially scam ads in the space. Discussing with Adweek how it was introducing technology to help it combat fraudulent advertising, including crypto scams, the ASA’s chief executive Guy Parker highlighted the need for the FCA to increase its focus on the problem. “Scams are a huge issue and are under the spotlight at the moment because of the pandemic and [during] lockdown people being stuck at home. There is a lot going on there in terms of the U.K. trying to get a better grip on this problem. We play a facilitative role in disrupting scam ads and scam advertisers but we are not the lead enforcement body,” explained Parker. In response to the government’s announcement, a spokesperson for the ASA welcomed the announcement to strengthen the rules around crypto-assets and bring them in line with other financial products, which it said would “provide more certainty” and improve the protection of consumers. “They need to know about the risks of investing in crypto-assets—and companies should make sure that their ads aren’t misleading or socially irresponsible by taking advantage of consumers’ lack of awareness around these complex and volatile products,” continued the comment. “Cryptoassets ads are red alert priority for us—and we've been conducting proactive monitoring in this space to find issues and draft specific guidance for businesses about how to advertise responsibly. We will continue to clamp down on misleading or irresponsible crypto-asset ads that fall within our remit and will work closely with the FCA to continue protecting consumers in the long term,” the spokesperson concluded.