So far, 2021 has been the year of cryptocurrency. Bitcoin and its fellow travellers like Ethereum and Doge (a currency shaped like a cartoon dog, invented as a joke that has made some of its early adopters millionaires) have gone from niche interest to global spanning behemoths.
Cryptocurrencies have appeared in the national news and major investment funds have explored buying them. Every day some new coin is invented and its early investors clamour to tell everyone that soon it will go “to the Moon” (i.e. make them wealthy).
As more and more businesses begin to work with cryptocurrencies, more and more consumers and marketers want in. But what do marketers need to look out for when it comes to keeping their advertising legal, decent, honest and truthful?
Cryptocurrencies aren’t regulated
Although the most famous cryptocurrency, Bitcoin, has been around for over a decade, cryptocurrencies are a relatively new development and they are not currently regulated by the Financial Conduct Authority (FCA). Marketers should therefore not imply that they are.
Some regulated trading platforms do allow cryptocurrencies to be traded on them, and it is those platforms that are regulated by the FCA. Some businesses may also fall under the jurisdiction of the FCA for a particular regulated activity, but not for their cryptocurrency products and those businesses should take care that they do not imply that their cryptocurrency products are regulated.
Past performance is no guarantee of future earnings
Although some people have made money investing in cryptocurrencies, they are volatile investments which can depreciate in value very quickly. Often the value of cryptocurrencies can fall even faster than they rise.
The Committee of Advertising Practice (CAP) Code requires that ads must make clear that the value of investments is variable and, unless guaranteed, can go down as well as up. So if marketers want to imply that consumers might make money from investing in cryptocurrencies, they have to make them aware of the risks too.
Because cryptocurrencies are so volatile, even including a disclaimer in the small print of an ad might not be enough to comply with the CAP Code.
The ASA ruled that an ad for a cryptocurrency exchange, which described Bitcoin as digital gold and that it allowed savers to take steps to secure the cash they had, was both misleading and irresponsible because it did not make clear the risks of investing in cryptocurrencies (Coinfloor Ltd).
But I just don’t understand!
The CAP Code also requires that marketers explain products in ways that are easily understood by those it’s addressing. Marketers should consider who might see their ads when thinking about what language to use.
The Advertising Standards Authority (ASA) has ruled in the past that a cryptocurrency exchange breached the Code by not setting its ads out in a way that would be readily understood by its audience (HDR Global Trading).
Other things to consider
Marketers who want to advertise cryptocurrency products should familiarise themselves with the Financial products section of the CAP Code.
In particular, because cryptocurrencies are quite new, marketers need to be careful that their ads do not take advantage of consumers’ inexperience or credulity.
They also must make the basis of any forecast or projection apparent immediately and must not misrepresent any past performance.
Non-fungible Tokens (NFTs)
NFTs are a digital certificate of authenticity that certifies the uniqueness of a certain digital asset, like a piece of digital art.
NFTs are linked to cryptocurrencies because they use the same technology (called ‘blockchains’).
It is important to remember that the NFT is not the piece of art or image itself, but a method of tracking ownership. If somebody sells you an NFT for a digital file, that does not stop them sending copies of that file to other people. The use of NFTs for copyright has also not been established and therefore, owning an NFT does not mean that you own the copyright.
NFTs are very new and consumer understanding of them may therefore be limited. Although the ASA has not yet ruled on any cases about NFTs, marketers should be careful to make their ads clear, accurate and understandable so they don’t mislead consumers.
For more on this topic, see guidance here – and for bespoke advice on your non-broadcast promotional marketing, CAP’s Copy Advice team are here to help.
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