By Katie Grant
Consumer Affairs Correspondent
An urgent investigation has been launched into adverts promoting cryptocurrencies and non-fungible tokens (NFTs).
Adverts for cryptocurrencies and NFTs are to be treated by the Advertising Standards Authority (ASA) as a “red-list priority” amid concerns firms might be taking advantage of consumers’ “poor understanding” of the market.
The regulator cited as causes for concern the “trivialisation of investments” in cryptocurrency, adverts “taking advantage” of consumers’ inexperience or credulity, and a lack of “appropriate risk warnings” pointing to the potential dangers of investing.
Cryptocurrencies such as Bitcoin, and other types of cryptoassets – which include NFTs – are largely unregulated in the UK and firms’ marketing activities have mostly escaped scrutiny.
Unlike traditional currencies, which are issued by a central bank or government and managed by regulatory financial institutions, cryptocurrencies are digital-only and have no central issuing or regulating authority. NFTs are unique digital tokens indicating ownership of an asset such as an artwork or a video. In recent months, a rash of celebrities have begun investing in and promoting NFTs on social media and encouraging fans to purchase the tokens they are selling.
The rapid ascent of cryptoassets has left regulators scrambling to catch up.
Announcing the clampdown, the regulator said: “We’re aware that people are concerned about cryptoasset advertising – particularly regarding cryptocurrencies and non-fungible tokens. This is a ‘red alert’ priority issue for us and we’re taking action.
“Cryptoassets have exploded in popularity in recent years, but there’s a real danger that people may be drawn in to invest life savings that they later lose based on poor understanding.”
It added: “We’re currently investigating a number of cryptoasset ads across different media, where we have concerns about lack of appropriate risk warnings.”
Earlier this month i revealed how a string of English football stars have been using their social media platforms to promote NFTs. Former England men’s captain Wayne Rooney recently landed a deal with an NFT platform to have his image featured in a collection of 2,000 artworks, priced at around £350 each. Rooney shared news of the partnership on Twitter to his 17.1m followers but did not make clear if his posts were advertisements. A spokesman for the retired footballer declined to comment.
In the US, professional wrestler John Cena, who participated in a separate NFT partnership with Worldwide Wrestling Entertainment (WWE), openly admitted earlier this year that the project had been a “catastrophic failure”.
For the tie-up, WWE released 500 NFTs for $1,000 (£750) each but only 37 were actually sold.
Cena said he had thought the asking price was “fair” but admitted he was “absolutely wrong” to charge fans this sum.
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