The Advertising Standards Authority (ASA), the UK’s advertising regulator, banned an NFT promotion by Crypto.com on Dec. 21.
According to the press release, ASA flagged a paid Facebook advertisement for the cryptocurrency platform, citing a failure to explain the risk of investing in NFTs and failing to clarify details regarding fees.
This isn’t the first complaint against an exchange announcement. Indeed, the regulator banned two ads from the platform following a complaint earlier this year that raised similar concerns.
The ruling of the SAA
In response to the ASA’s decision, Crypto.com does not consider the NFTs available on its platform to be “financial in nature”. It further said that the ad was only promoting the exchange itself on which specific NFTs and non-NFTs could be bought, and called the regulator’s request “unreasonable”.
Further disputing the need to mention fees, Crypto.com said the announcement in question did not refer to the company’s sales capabilities and only referred to the purchase of NFTs, which did not carry fees for any payment method.
Crypto.com also said that customers received clear warnings about associated fees once they chose to put an NFT up for sale. Customers who use the platform to mint their NFTs have also been warned of such fees before they can use the service.
However, the complaint was upheld by the ASA, which ordered that the advertisement must no longer appear in its current form.
“We told Foris DAX Global Ltd t/a Crypto.com that their advertising must clarify the risks of NFTs by stating that it is an unregulated crypto asset and that their value could go down as well as up. They also should not omit material information regarding fees and charges on their platform.
Meanwhile, ASA also filed a similar complaint against a project called Turtle United and called its Facebook advertising misleading. Turtle United did not answer questions.
UK Regulation: Advertising Spotlight
The ASA has stepped up its focus on cryptocurrency advertising since last summer and was preparing to introduce more guidelines. The goal is to prevent misleading ads by conducting proactive monitoring and the enforcement of crypto advertising.
The comprehensive Financial Services and Markets Bill (FSMB) is currently under discussion after receiving all-party support. It should be signed into law by next spring.
A recently approved amendment will allow the Financial Conduct Authority to regulate cryptocurrencies under the rules of the existing promotion. Therefore, cryptocurrency announcements will be held to the same standards as other investment announcements, thus providing ASA with a stronger mandate. Additionally, such ads will need to be labeled with an appropriate risk warning.
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