Ban Of “Misleading” Ads By UK Regulator Revives Debate Over Crypto Regulation

In its latest crackdown on cryptocurrency firms, the United Kingdom’s advertising regulator, the Advertising Standards Authority (ASA), announced in a Wednesday (Jan. 5) ruling that it had banned two adverts by Singapore-based blockchain startup, Crypto.com.

The ban was mainly because of the “misleading” nature of two in-app ads, the first seen on 1 Sept., 2021, in the Daily Mail app, with a text stating “Buy Bitcoin with credit card instantly.” The second ad, shown in the Love Balls mobile game app on 30 July 2021, included the following: “Earn up to 3.5% [per annum],” a number which later increased to “8.5%.”

ASA challenged Forisgfs UK Ltd — trading as Crypto.com – on five grounds, all of which were upheld in the ruling.

They included the fact that both ads were not only “irresponsible and took advantage of consumers’ inexperience or credulity,” but they failed to clearly define the risks involved in crypto investments. ASA also ruled that the claim ‘Earn up to 8.5%’ in the Love Balls ad “could not be substantiated.”

The regulator went on to order the cryptocurrency trading platform to ensure that future ads “made sufficiently clear” how volatile cryptocurrency investments were and that cryptocurrency was unregulated in the U.K.

“We told them that future ads must make clear that the purchase of cryptocurrency using a credit card could be subject to higher interest rates, extra fees and that some credit card issuers prohibit the buying of cryptocurrency,” ASA added, further requiring the firm to ensure they had “adequate substantiation” to support the basis of any future projection in their ads.

A spokesperson from Crypto.com sent the following response to PYMNTS: “We believe building a fully-regulated industry is the best way to accelerate the world’s transition to cryptocurrency, which has long been our mission. Engaging regulators to ensure compliance and building trust remain Crypto.com’s highest priorities. Not only did we remove both ads immediately upon engaging with the ASA, but we have voluntarily pledged to go above and beyond the ASA’s rules by complying with FCA’s Treating Customers Fairly outcomes 2 and 3 for customer communications, on an ongoing basis.

“We appreciate the collaborative dialogue and engagement from the ASA regarding advertising in the UK in this relatively new industry, and remain committed to working with them and regulators around the world to ensure all of our activities are compliant with the most recent regulatory guidelines.”

Read more: Coinbase, eToro Crypto Ads Banned for Misleading Consumers, Said UK Advertising Regulator

Crypto.com is not the first cryptocurrency firm to draw the ire of the ASA, however. Just last month, the watchdog took action against seven of the sector’s biggest firms, including Coinbase and eToro, for misleading and irresponsible ads promoting crypto investments.

American pizza restaurant chain Papa John’s, which claims to have been the first company offering free Bitcoin for pizza purchases in the U.K., was also targeted by the ASA for “trivialized” investing in crypto assets. The promotion was run in association with cryptocurrency exchange Luno Money, another firm that also received a warning from the regulator.

The rulings came after the regulator announced in July that misleading crypto marketing was a “red alert” priority that the agency was going to start paying close attention to. “We see this as an absolutely crucial and priority area for us,” Miles Lockwood, ASA’s director of complaints and investigations, said at the time, per a PYMNTS report.

See also: Matt Damon Now Face of Crypto.com

Crypto.com claims to offer more than 150 cryptocurrencies, serving over 10 million customers worldwide in 90 countries. In recent months, the firm has made a big marketing push as it seeks to broaden its base, airing ads featuring actor Matt Damon in over 20 countries, PYMNTS reported.

Read also: Bank of England’s Governor Says Cryptocurrencies Need Regulation

But the Singapore-based blockchain startup will have to tread cautiously in the U.K., where public sector leaders are exploring ways to regulate the sector amid the ongoing crackdown on digital currency firms.

In October, Bank of England (BoE) Deputy Governor Sir Jon Cunliffe called for an immediate regulation of cryptocurrencies, despite acknowledging that the digital funds were not a danger to financial security. He said that could change, however, potentially leading to a crypto crash that could invade the markets, according to a PYMNTS report.

Related news: Bank of England: Measures Needed to Manage Potential Crypto Risks

Cunliffe’s call for crypto regulation came on the heels of a report by the BoE’s Financial Policy Committee, which stated that regulations and law enforcement guidelines were required to manage risks associated with cryptocurrencies both in England and globally.

Also related: UK Crypto Exchanges Face 2% Tax, Not Exempt Since Country Doesn’t Recognize Digital Assets

And in November, it was announced that U.K.-based crypto exchanges won’t qualify for an exemption to financial markets and will now have to pay a new digital service tax, as Her Majesty’s Revenue and Customs (HMRC) doesn’t recognize digital assets as financial instruments.

More on UK crypto regulation:

UK’s Push Toward Crypto Framework May Buck Bankers’ Reservations

Calling for New Regulatory Framework, BoE Governor Says Crypto Becoming Threat to UK Financial Stability

Bank of England to Ramp Up Talks on Crypto Rules as Data is Elusive

Regulation Meets Technology in 2022 as FinTech, BigTech and Crypto Prep for New Rules