50+ UK Crypto Firms Warned by ASA and FCA for Non-Compliance of Guidelines

Yesterday, the United Kingdom’s Advertising Standards Authority instructed over 50 crypto companies to assess their advertisements to ensure compliance with the guidelines. The directive has been issued on the back of the UK taking a stricter stance against the crypto industry.

Earlier in January, the government revealed that it would subject crypto ads to the same restrictions as financial promotions. Firms failing to comply before May 2 will be sanctioned with the new directive, and non-compliant advertisers will be reported to the FCA (Financial Conduct Authority).

New Directive To Curb Rampant Crypto Scams 

The new directive has been made to curb misleading ads, which have led to citizens being scammed. A recent study from Which revealed that consumers filled over 448,838 fraud reports with Action Fraud between November 2020 and December 2021. Over £1.9 billion ($2.5 billion) was lost to fraud of various kinds, including online shopping scams, pyramid schemes, and rental fraud.

According to the survey, Cryptocurrency scams also emerged as one of the 12 fraud threats in the UK. Scams involving digital assets increased by 34% last year. Action Fraud said it received 9,458 claims on cryptocurrency, with a total loss of £204.5 million—an average of £21,620 per report.

Despite the apparent advantages of cryptocurrencies, the level of crypto scams that have increased in volume has raised concerns. The crackdown on ads by the ASA and the FCA has become necessary as they offer an avenue for perpetrators to reach consumers.

The ASA did not name the companies it had contacted. Still, it has previously prohibited ads from cryptocurrency exchange Coinbase and pizza giant Papa John’s due to consumer misinformation concerns.

Furthermore, it provided clear guidance to these corporations on how their ads can comply with regulatory standards. It recommended that adverts make it clear that digital assets are unregulated in the United Kingdom. Also, the firms must not urge individuals to buy Bitcoin or another cryptocurrency through their ads or generate a “fear of missing out” on an investment.

Also, in line with further compliance efforts, a separate deadline of March 31 has been set for crypto companies to register with the FCA. If their application is not accepted in time, several companies, including Revolut and Copper, may be forced to shut down their crypto activities in the UK.

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Despite Crackdown on Crypto Advertising, UK is not Perceived to be Anti-Crypto

The move by the authorities in the UK has seen many say it has become increasingly anti-crypto. However, that sentiment may not be entirely accurate. Lavan Thasarathakumar, Global Digital Finance’s director of government and regulatory affairs, expressed concerns about the new directive. He called for adopting a new tailed rule rather than widening existing legislation that stifles the crypto market.

“Rather than attempting to broaden the scope of existing legislation, stifling the market and attracting unintended consequences, a new bespoke regime should be implemented. This regime would include obligations for how crypto-asset promotions should be communicated and clarify how crypto-asset firms should conduct themselves and how regulators should supervise them.”

However, the UK authorities have an obligation to their citizens. With data backing increased fraud through crypto, it has decided on a measure to prevent more individuals from falling victims to scams. This course of action is required as the crypto industry is yet to be regulated. But proper consultation is necessary with stakeholders in the sector to ensure the rulings are not stifling the market.

Similarly, reports suggest the NFL (National Football League) will allow its teams to pursue restricted three-year sponsorships from blockchain companies. However, its ban on token or coin promotion is still in place. 

The NFL has opted to authorize promotional connections with blockchain firms because of the growing popularity of cryptocurrencies and NFTs. After examining blockchain technology, it said teams could have promotional partnerships with companies like FTX, Crypto.com, and Coinbase.

Do you think the ASA and FCA crackdown is overall beneficial to the citizens of the UK? Let us know your thoughts in the comments below.