By George Ward
In the latest move to ensure compliance with rules regarding the promotion of non-fungible tokens (NFT), the United Kingdom’s advertising regulator has banned two entities for failing to heed the body’s directive. Accordingly, the regulator has blocked Crypto.com and Turtle United over their failure to ensure proper consumer disclosure.
A Ban For Improper Conduct
According to reports, the UK’s Advertising Standards Authority (ASA) has moved against both Crypto.com and Turtle United after they failed to specify the risks associated with NFT investments. They allegedly paid for Facebook ads in July.
However, Crypto.com has contested the charges against it by stating that the ads for its NFT marketplace are no longer active. The firm further added that it did not believe that the digital collectibles on its platform comprising artists’ works and sports merchandises are financial products.
According to Crypto.com, due to the removal of NFTs from the Treasury consultation document on cryptocurrency, it wants the regulator to exempt it from the ASA financial rules. In addition, Crypto.com wants the regulator to specify if proceeds from crypto trading are subject to capital gains tax and whether they are unregulated.
Despite the plea from the crypto exchange about its ban, ASA has upheld its earlier stance. Furthermore, the regulator has a similar case against Turtle United, with the company saying nothing about the ASA’s ban.
According to the regulator, Turtle United should have highlighted how its past performance cannot serve as a guide for investors in the long run. Instead, Turtle United has advertised that it offers immense value for its consumers, which ASA sees as an overuse of promotion.
The regulator added that the ad implies that the digital collectibles come with a significant discount, which is not true. The current trading price for Turtle United’s NFT is 0.02 ETH, which is approximately $24, as revealed by the data from OpenSea.
What the Ruling Means
From all indications, the regulator’s ruling signifies a warning for both firms not to engage in re-running the same ads. Furthermore, at the beginning of the year, ASA revealed that it is ramping up its crypto guidelines to focus on digital asset advertisement and introducing user guidelines.
Interestingly, Crypto.com was cautioned by the regulator in January for running two ads that did not comply with the regulator’s guidelines. The ASA stated that the ads should have shown investors the risk of investing in digital assets.
As a result, ASA deems the advertisement “irresponsible,” intending to take advantage of consumers’ lack of information to cash out. The UK recently amended its digital asset promotion guideline prohibiting digital asset advertisement without official approval.
Thus, in October, the country launched its new Financial Services and Markets Bill, which seeks to oversee the promotion of digital assets through an agency. However, the bill focuses more on the intervention of regulators in the event of a general risk to the UK’s financial sector.
The new rule specifies that no entity should engage in business without the Financial Conduct Authority’s (FCA) approval.