UK Chancellor of the Exchequer Rishi Sunak plans to crack down on “misleading” cryptocurrency ads by bringing them under stricter legislation.
In the proposed plan, so-called cryptoasset advertising will be made subject to Financial Conduct Authority rules. Cryptocurrency will then be held to the same advertising standards as stocks, shares and insurance.
The government said it will achieve this via secondary legislation to the Financial Services and Markets Act 2000. The act rules that businesses cannot promote a financial product unless they are authorised by the FCA, Prudential Regulation Authority, or a firm that is approved by these two bodies.
The FCA and PRA stipulate that financial promotion should be fair, clear and not misleading.
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Sunak said: “Cryptoassets can provide exciting new opportunities, offering people new ways to transact and invest – but it’s important that consumers are not being sold products with misleading claims.
“We are ensuring consumers are protected, while also supporting innovation of the cryptoasset market.”
It is thought that about 2.3 million people in the UK own a cryptoasset, but the understanding of what cryptocurrency actually means is declining, according to research by the FCA.
Cryptocurrency marketing is coming under increasing scrutiny from other quarters, including the Advertising Standards Authority.
The ASA has banned several examples of cryptocurrency marketing recently, including a Twitter post for pizza delivery brand Papa John's (pictured below), which offered "free Bitcoin" in partnership with exchange Luno. The ad was deemed to irresponsibly trivialise investment and exploit people's ignorance.
Other bans by the watchdog include for Coinburp, which was censured for playing on lack of consumer experience and failing to communicate the risks associated with investment in its exchange.