UK Advertising Regulator flags Crypto.com’s NFT campaign

The Advertising Standards Authority (ASA) – the UK’s advertising regulator – banned an NFT campaign by Crypto.com on 21 December.

According to the press release, the ASA flagged a paid Facebook ad for the crypto platform, citing a failure to illustrate the risks of investing in NFTs, as well as clarifying details regarding fees.

This is not the first complaint about an advertisement from the stock exchange. In fact, the regulator banned two ads from the platform following a complaint earlier this year that raised similar concerns.

ASA ruling

In response to the decision of the ASA, Crypto.com does not believe that the NFTs available on its platform are “financial”. It further stated that the ad only promoted the exchange itself where NFTs could be bought, and not specific NFTs, calling the regulator’s request to be “unreasonable.”

In addition to disputing the need to mention fees, Crypto.com said the ad in question did not refer to the company’s sales capabilities and only indicated the purchase of NFTs, which did not incur a fee for any payment method.

Crypto.com also argued that customers were given clear warnings about the associated fees when they chose to post an NFT for sale. Clients who used the platform to create their own NFTs were also notified of such fees before using the service.

The complaint was nevertheless upheld by the ASA, who advised that the advertisement must not be shown again in its current form.

“We told Foris DAX Global Ltd t/a Crypto.com that their advertising must clarify the risks of NFTs by saying that they were an unregulated crypto-asset and that the value can go down as well as up. They should also not omit important information about fees and charges on their platform.”

Meanwhile, the ASA also issued a similar complaint against a project called Turtle United, calling the Facebook ad misleading. Turtle United did not respond to inquiries.

UK Regulation: Spotlight on Advertisements

The ASA had increased its focus on crypto advertising since last summer and was preparing to introduce further guidance. The goal is to prevent misleading ads by proactively monitoring and enforcing crypto advertising.

The comprehensive Financial Services and Markets Bill (FSMB) is currently being debated after receiving cross-party support. It is expected to be adopted next spring.

A recently approved amendment will enable the Financial Conduct Authority to regulate crypto under the existing campaign rules. As such, the crypto ads will be held to the same standard as other investment ads, thus giving the ASA a stronger mandate. In addition, such advertisements must be labeled with an appropriate risk warning.