British Treasury wants to crack down on misleading” crypto campaigns

The UK Treasury has unveiled plans to change the law to improve consumer protections and make advertising for the fast-growing crypto industry subject to the same standards as other types of financial products.

In a statement on Tuesday, Rishi Sunak, Britain's chancellor, said crypto assets could offer people new ways to transact and invest, "but it is important that consumers are not 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 for consumers who had little financial knowledge.

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 like Bitcoin and Ether has skyrocketed and hundreds of new digital tokens have been launched. Last year, the UK market regulator estimated that 2.3 million people in the country owned some crypto assets.

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

Until now, responsibility for crypto advertising has largely rested with the Advertising Standards Authority. Adding FCA oversight represents a major tightening of rules, as the ASA's powers are generally limited to investigating adverts 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 reprimanded seven crypto groups over a variety of promotions, including online campaigns and the use of social media influencers, saying “something needs to change quickly in the online space.”

Promotions of crypto coins and services on public transport in London have attracted particular attention, with some elected officials calling for a ban.