UK Treasury to crack down on ‘misleading’ crypto promotions

The UK Treasury has set out plans to change the law to increase consumer protections and bring advertising for the fast-growing crypto industry under the same standards as other types of financial products.

In a statement on Tuesday, Rishi Sunak, UK chancellor, said crypto assets could offer people new ways to transact and invest “but it’s important that consumers are not being sold products with misleading claims”.

The proposals underscore a growing trend among regulators worldwide to tighten advertising standards as they wrestle over how to regulate a fast-growing global industry.

This week Spain imposed restrictions on the promotion of cryptocurrencies while the Italian regulator also warned of risks to consumers who had little knowledge of finance.

The UK proposals come after the government began an industry consultation on crypto advertising in the summer of 2020. Since then the price of popular crypto assets such as Bitcoin and Ether has soared and hundreds of new digital tokens have been launched. Last year the UK markets regulator estimated that 2.3m people in the country owned some crypto assets.

The Treasury said it would bring crypto ads under the scope of existing legislation that covered financial promotions, which states that “financial promotions must be fair, clear, and not misleading”.

Until now, responsibility for crypto adverts has largely rested with the Advertising Standards Authority. Adding Financial Conduct Authority oversight represents a big tightening of the rules, since the ASA’s powers are generally limited to investigating ads after the fact rather than requiring prior approval. The FCA can also impose fines on companies for serious breaches of its standards.

Last month, the ASA rebuked seven crypto groups for a wide range of promotions including online campaigns and the use of social media influencers, saying “something has to change fast in the online space”.

Promotions for crypto coins and services on London public transport have attracted particular attention and calls for a ban from some elected officials.