UK to clamp down on cryptocurrency advertising

The UK government has said it intends to strengthen the rules governing crypto ads to bring them in line with other financial assets.

According to the ‘Cryptoasset Financial Promotions Response’ document, the rules will be used in order to increase consumer protection at the same time as they encourage innovation.

The Treasury said that proposed legislation would also provide the UK financial watchdog, the Financial Conduct Authority (FCA), with the power to regulate the crypto market more effectively.

“The government is seeking only to amend activities where strictly relevant to cryptoasset businesses, in order to avoid unnecessary and disproportionate amendments to the regulatory perimeter”, the report said.

The government began consulting on a proposed framework for regulating crypto promotions back in 2020 and, since then, the Advertising Standards Authority (ASA) has stepped in to ban misleading advertising on a number of occasions.

Earlier this month, the ASA banned two ads by Crypto.com saying the company was encouraging people to buy Bitcoin with credit cards.

However, the ASA said it won’t prohibit the use of the term ‘blockchain’ as it is not considered an asset but an underlying technology.

Hybrid tokens and distributed ledger technologies (DLTs) are also being removed from the definition of qualifying cryptoassets.

The government has also decided to retain fungibility in the definition of qualifying cryptoassets, leaving non-fungible tokens (NFTs) out of scope as well.

“While most cryptoassets currently use distributed ledger technology (DLT), it might be that this changes as the technology and industry evolve,” the consultation response said.

“Therefore, the UK government proposes to remove the reference to DLT from the definition of qualifying cryptoassets.”

The Treasury added that, while the number of crypto users in the country was on the rise, “public understanding of cryptoassets is declining with only 71% of those who have heard of cryptoassets correctly identifying its definition”.

The proposal added that the UK government plans a transitional period of six months from the finalisation and publication of the proposed Financial Promotion Order regime and the complementary FCA rules.