City Watchdog Now Going Into Bat Against Misleading Crypto Promotions
- Investment , Cryptocurrencies
- 18.01.2022 03:15 pm
Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown:
“The Advertising Standards Athority has been valiantly trying to bat against the pace bowler onslaught of complaints about misleading crypto promotions but it’s clearly been needing another team mate given the scale of the problem. Bringing the Financial Conduct Authority onto the pitch, with crypto ads brought under existing rules governing financial promotions, it will beef up the defence of consumers against a barrage of crypto ads promising fast and easy returns.
It will come as relief for the ASA which could only censure firms after the ads had been posted and may have already ensnared vulnerable investors. It’s not just obscure crypto trading exchanges which have seen ads banned, even Arsenal Football Club has been censured for promoting risky assets like tokens to fans without enough warnings attached. With the FOMO effect so strong, far too many financially vulnerable consumers have been at risk getting their fingers seriously burnt, given the high volatility of the coins and tokens.
Once this new legislation is passed firms promoting crypto products will have a much higher bar to jump to show that ads are fair, clear and not misleading and companies could face hefty fines for serious breaches.
Already it’s estimated that 2.3 million people in the UK owned some form of crypto asset in 2021 and there is clearly growing concern at the heart of government and regulatory bodies about the increased speculation surrounding crypto currencies.
This proposed change in legislation comes after repeated warnings from the Financial Conduct Authority that consumers could lose all their money if they succumb to the promises of fast and high returns. News of the rule changes comes at a timely moment, given that the value of Bitcoin has dropped by 38% since its all-time high of over $68,000 in November, slipping back around 1% to $41,850.today.
The rollercoaster ride is set to continue given that crypto assets are also highly sensitive to the fortunes of the stock market and were propelled higher in an era of ultra cheap money. As speculation swirls about how rapidly central banks will tighten mass bond buying programmes and start raising interest rates, given soaring inflation, they are likely to stay volatile.”