UK watchdog puts 50 crypto firms on notice over ‘misleading’ ads
An ATM for bitcoin in Finsbury Park (London) on February 4, 2022.
Luke MacGregor | Bloomberg | Getty Images
LONDON — Over 50 cryptocurrency companies have been sent enforcement notices by the U.K.’s advertising watchdog as part of a regulatory crackdown on promotions in the industry.
Advertising Standards Authority said TuesdayThe agency has asked the agencies to inspect their ads and verify that they conform with rules. Targeted sanctions were also offered to firms if the “problem ads”, as it calls them, persists after May 2.
The Financial Conduct Authority would be the regulator responsible for reporting any non-compliant advertiser.
The regulator sent guidance to all companies in its notice. It stated that adverts should clearly state digital assets aren’t regulated in the U.K. and firms must not encourage users to purchase bitcoin or any other cryptocurrency.
Although the ASA did not name any of the companies that it had contacted, it stated it has banned advertisements from crypto platforms in the past. CoinbaseA pizza restaurant Papa John’sOver concerns that they misled customers.
According to the ASA, “This is a’red alarm’ priority issue. We’ve previously banned many crypto ads that mislead consumers or are socially irresponsible.” The statement was made Tuesday.
This comes at a time when Britain is taking a more aggressive stance on crypto. In January, the government announced that it will bring crypto advertisements under the same financial promotion rules as other ads. This would mean that advertisers within the sector would need to be approved by regulators.
The regulators have proposed that crypto advertisements be limited so consumers can only respond if they meet the criteria of sophisticated investors or high-net-worth individuals. This move has been criticised by representatives from the industry.
The Wednesday consultation of the Financial Conduct Authority and the crypto industry about regulation is scheduled to end.
Global Digital Finance is an industry group that also includes cryptocurrency exchanges Coinbase & Bitfinex. It stated it sent Rishi Sunak a letter expressing concerns.
In the letter, Lavan Thasarathakumar (Director of Government and Regulation Affairs at Global Digital Finance) stated that rather than trying to expand the reach of the existing legislation and creating market pressure and unintended consequences, it was better to implement a new, custom regime.
“This system would contain obligations on cryptoasset promotions and provide more clarity about how cryptoasset businesses should conduct themselves as well as how regulators need to supervise them.”
Separately, the deadline to register crypto-firms with FCA will expire on March. 13. Revolut and Copper are just two of the many companies that could be facing the possibility of closing down crypto operations in the U.K., if they don’t get their applications approved on time.