Background
On 8 October 2023 the FCA took over the regulation of ads for ‘qualifying cryptoassets’ – cryptoassets that are transferable and fungible, including cryptocurrencies and utility (fan) tokens – and introduced new rules. However, cryptoassets as a product remain unregulated. As of this date, complaints about misleading non-broadcast advertising for qualifying cryptoassets will be referred to the FCA for their consideration. The new rules do not cover cryptoassets that are non-fungible, such as Non-Fungible Tokens (NFTs), or Limited Payment Tokens that can only be redeemed with the issuer and used for the payments of specific goods and services, such as non-monetary customer loyalty points, and the ASA will continue to regulate all ads for these products.
Summary of Council decision:
Two issues were investigated, both of which were Upheld.
Ad description
A regional press ad for Coinfloor Ltd, a Bitcoin and cryptocurrency exchange, seen in the Northamptonshire Telegraph on 3 December 2020, was titled “There is no point in keeping your money in the bank…”. It featured an image and the name of a woman, described as aged 63, and text stated “More and more people are waking up to the savings power of Bitcoin… When [name] turned 60, she received part of her pension from a previous job and decided to research the market for the best way of investing it… ‘I come from a generation of savers, not spenders […] Today there is no point keeping it in the bank – the interest rates are insulting […] That is why when I received my pension, I put a third of it into gold, a third of it into silver and the remainder into Bitcoin… To me, Bitcoin is digital gold and it has allowed me to take the steps to secure the cash I already have… Thanks to Coinfloor’s Autobuy service, buying and holding Bitcoin has never been easier – there was just a simple sign-up process and then I could buy Bitcoin automatically straight from my bank account […]’. Use Coinfloor to help you build your Bitcoin Savings portfolio”. Small print at the bottom of the ad stated “Investing in cryptocurrencies involves significant risk and can result in the loss of your invested capital. You should not invest more than you can afford to lose”.
Issue
The complainant, who believed the ad targeted retirees, challenged whether the ad was:
1. misleading, because it failed to make clear the risks associated with Bitcoin investments, including loss of capital, and that neither Coinfloor Ltd nor the general Bitcoin market were regulated in the UK; and
2. socially irresponsible, because it suggested that purchasing Bitcoin was a good or secure way to invest one’s savings or pension.
Response
1. & 2. Coinfloor Ltd said that all views expressed in the ad were from the perspective of the Coinfloor customer who was featured, and her view did not represent Coinfloor’s view. Her comments were displayed separately in a white box, in italicised text and within quotation marks, and included statements such as “to me”. They said they wanted to bring the customer’s personal story to the public’s attention to show who their customers were, and Coinfloor had outlined their proposition in the blue box on the bottom left, which was intentionally a different colour box to the comments made by the customer, to draw a clear distinction. They said they had also included a disclaimer stating that cryptocurrencies involved significant risk and could result in the loss of invested capital, which they considered to be sufficiently prominent.
Coinfloor said there was no suggestion in the ad that the customer’s actions constituted a wise or secure investment, and that neither Coinfloor nor the customer had claimed that investors would make money by investing in Bitcoin, or recommended consumers should invest in Bitcoin. They said the customer was simply stating she owned Bitcoin as part of a broader array of assets (i.e. gold and silver) as an inflation hedge, which was a widely adopted strategy. They highlighted there was no mention of past performance for Bitcoin in the ad. Coinfloor said the disclaimer in the ad provided information in a clear and succinct manner about the risks associated with investing in cryptocurrencies, stating clearly that it could result in loss. The ad only shared the reasons why one of their customers, in her own words, had invested in Bitcoin. Coinfloor said the positioning and size ratio of the disclaimer appeared consistent with those they had seen in other ads, and they considered the white text on a dark blue background was legible. They said they understood the importance of ensuring limitations and qualifications were as prominent and clear as possible, and given that cryptocurrencies and their advertising were new, they acknowledged the concerns raised about the disclaimer in the complaint and said they were willing to make appropriate adaptations.
JPIMedia t/a Northamptonshire Telegraph said that having reviewed the ad in light of the complaint they would not accept it for publication again within their titles unless suitable qualifications were used, and providing the copy had been cleared by the CAP Copy Advice team.
Assessment
1. Upheld
The ASA understood that initial capital invested in Bitcoin was subject to price fluctuations which could result in both losses and gains in value. The CAP Code required that marketing communications for investments made clear that the value of investments was variable and, unless guaranteed, could go down as well as up, and also that significant limitations and qualifications were stated and presented clearly. The ad included a small print disclaimer at the bottom of the page stating “Investing in cryptocurrencies involves significant risk and can result in the loss of your invested capital. You should not invest more than you can afford to lose”. However, we considered the disclaimer was insufficient to counteract the overall message of the ad that buying Bitcoin represented a secure investment, and given the font size and its positioning it had not been presented clearly or prominently enough to ensure consumers were made aware of the risk of loss of capital.
The ad appeared in a regional newspaper targeted to a general readership and we considered the audience was therefore unlikely to have extensive financial knowledge and experience on the nature of cryptocurrencies and Bitcoin, and may expect that the exchange of Bitcoin would be regulated, with legal protection in place for investment activities. We understood that neither Coinfloor nor the general Bitcoin market were regulated within the UK, and therefore consumers could not seek recourse to services such as the Financial Services Compensation Scheme or the Financial Ombudsman Service.
The ad directly compared investing savings in Bitcoin with the use of regulated services, discouraging consumers from placing their money in banks. Particularly in light of that context, we considered the fact that Coinfloor Ltd and the Bitcoin market were unregulated to be material information that consumers required in order to make informed decisions about Coinfloor’s product, and should have been made clear in the ad. We therefore concluded that the ad was misleading because it had not made sufficiently clear that the value of Bitcoin could go down as well as up, or that the Bitcoin market was unregulated in the UK, and was in breach of the Code.
On that point the ad breached CAP Code (Edition 12) rules
3.1
3.1
Marketing communications must not materially mislead or be likely to do so.
3.3
3.3
Marketing communications must not mislead the consumer by omitting material information. They must not mislead by hiding material information or presenting it in an unclear, unintelligible, ambiguous or untimely manner.
Material information is information that the consumer needs to make informed decisions in relation to a product. Whether the omission or presentation of material information is likely to mislead the consumer depends on the context, the medium and, if the medium of the marketing communication is constrained by time or space, the measures that the marketer takes to make that information available to the consumer by other means.
(Misleading advertising),
3.9
3.9
Marketing communications must state significant limitations and qualifications. Qualifications may clarify but must not contradict the claims that they qualify.
3.10
3.10
Qualifications must be presented clearly.
CAP has published Advertising Guidance on Misleading advertising: use of qualifications.
(Qualification), and
14.4
14.4
Marketing communications must make clear that the value of investments is variable and, unless guaranteed, can go down as well as up. If the value of the investment is guaranteed, the marketing communication must explain the guarantee.
(Financial products).
2. Upheld
The headline statement of the ad was “There is no point in keeping your money in the bank”, followed by a Coinfloor customer’s photograph and testimony, which emphasised that she had decided to invest a lump sum of her pension fund into Bitcoin through Coinfloor’s exchange, due to low interest rates in banks. We considered the ad therefore particularly targeted an older readership and people who were receiving pensions. Additionally, while the testimony was presented as a personal story, in the context of it appearing in an ad for Coinfloor we considered that consumers would understand it to represent Coinfloor’s recommendations and intended messaging.
The ad made various references to the investment of savings in Bitcoin. We considered that the statement “To me, Bitcoin is digital gold and it has allowed me to take the steps to secure the cash I already have” in particular suggested that buying Bitcoin represented a secure investment. Additionally the ad stated “Use Coinfloor to help you build your Bitcoin Savings portfolio”, and the testimony began with “More and more people are waking up to the savings power of Bitcoin”.
We considered that funds in savings accounts were commonly understood not to diminish in value; however, we understood that Bitcoin investment portfolios could expose investors to losses. We therefore considered that the statements “Bitcoin Savings portfolio”, and “the savings power of Bitcoin”, added to the overall impression that funds invested in Bitcoin through Coinfloor were safe and would not reduce in value. We concluded that the ad irresponsibly suggested that purchasing Bitcoin through Coinfloor was a secure way to invest one’s savings or pension, particularly given that the audience it addressed were likely to be inexperienced in their understanding of cryptocurrencies, and therefore was in breach of the Code.
On that point the ad breached CAP Code (Edition 12) rule 1.3 1.3 Marketing communications must be prepared with a sense of responsibility to consumers and to society. (Social responsibility) and 14.1 14.1 Offers of financial products must be set out in a way that allows them to be understood easily by the audience being addressed. Marketers must ensure that they do not take advantage of consumers' inexperience or credulity. (Financial products).
Action
The ad must not appear again in its current form. We told Coinfloor Ltd to ensure that future marketing communications made sufficiently clear that the value of investments in Bitcoin was variable and could go down as well as up, that Coinfloor Ltd and the Bitcoin market were unregulated, and that they also did not irresponsibly suggest that purchasing Bitcoin represented a secure investment of one’s savings or pension.
CAP Code (Edition 12)
1.3 3.1 3.3 14.1 14.4 3.10 3.9
