What precautions should cryptoasset advertising take?

What precautions should cryptoasset advertising take?


Written by: Marilu Lazo Mac Dowall

Associate at Lawgic Tec and Blogger at The Crypto Legal

Recently there was a case of an advertisement in the UK targeting the pensioner group. In previous notes we pointed out that pension fund investment in bitcoin was a fact of life in the United States. With the exponential growth that bitcoin continues to have, it is extremely attractive to invest a percentage of pension funds in this cryptocurrency.

However, everyone should be aware that the currency is highly volatile, so while it can be beneficial if the price goes up, it can also have a tragic outcome if the opposite happens. Investing pension funds in these cryptoassets involves risking money that represents the ultimate livelihood of many pensioners; it is money that cannot be put at stake as if there were more to replenish it. Precisely because of this, Bill Gates pointed out that Bitcoin investment is valid or “acceptable” for people who do not depend on this money, but can afford to invest it in this risky market. Perhaps this may be considered overly cautious thinking, but the truth is that the importance of these funds warrants it.

Nevertheless, investing pension funds in these cryptoassets is a growing practice. Therefore, if you want to advertise for investment in cryptocurrencies, you should give real information and not misleading information about the nature of these investments.

In this sense, the UK Advertising Standards Authority confirmed that the advertisement disseminated by the Exchange Coinfloor was misleading and socially irresponsible, Cointelegraph reported. Based on what? The ad featured a 63-year-old woman explaining her decision to convert part of her pension into bitcoin: “More and more people are realizing the saving power of Bitcoin. Today it makes no sense to keep it in the bank, the interest rates are insulting (…) That’s why, when I received my pension, I put one third in gold, one third in silver and the rest in Bitcoin” Similarly, another person equated bitcoin as “digital gold”.

In the face of these claims, the Advertising Standards Authority stated that the ad did not indicate the risks associated with bitcoin, nor the fact that the bitcoin market is a deregulated market in the UK.

Perhaps one of the points in favor of the ad is that the lady was not going to invest her entire pension in bitcoin, but only one-third (risk diversification), keeping the other two-thirds in “safe” commodities. However, although the advertisement did not present the cryptocurrency as a “safe investment” (which would have been, in such a case, obviously misleading advertising), it is true that it might be advisable to include a disclaimer alerting viewers to its volatility and the fact that it is a deregulated market (where there is no public entity to turn to in case of inconveniences).

Finally, although individuals should have the due diligence to obtain this information on their own, it is quite worrisome the effects it could have if someone indeed equates a bitcoin to gold, and on that basis decides to invest their savings.