A trio of ads for digital assets have been reprimanded by the ASA, over not illustrating the risks involved in the potential investment.
One of the promotions, appeared on Facebook and was for Crypto.com, is no longer live and was deemed by the regulatory body to have failed to highlight the fees involved with a purchase.
In its response, the crypto firm detailed ‘they did not believe the NFTs available on their platform, which included artists’ work and sports collectibles, to be financial in nature. They understood that was supported by HM Treasury’s recent consultation paper that excluded NFTs from the scope of financial promotion reforms.
“They therefore believed NFTs should be exempt from the financial rules of the CAP Code and should not have to make clear that profits from cryptocurrencies were subject to Capital Gains Tax and that they were unregulated’.
The group added: “They acknowledged that recent ASA online advice did consider NFTs to be cryptoassets and subject to the financial rules of the CAP Code. However, their ad predated the advice and so they said it could not have complied at the time it was put out, as they believed that guidance had not yet been issued.
“They said further that the ad only promoted their platform on which NFTs could be purchased and not specific NFTs. Therefore, even if the ASA’s financial rules applied to NFTs it would be unreasonable to request that the specific ad include limitations or qualifications regarding the risk of investing in NFTs.”
Very similar complaints were upheld over an FC Barcelona NFT, which featured Johan Cruyff, and also failed to highlight the ‘significant restrictions in ownership’.
The footballing giant responded by stating: “Barcelona said that Non Fungible Tokens (NFT) were not financial products. They said they were not defined as restricted activities by the FCA, unlike some security tokens or e-money tokens, and so the purchase of an NFT could not be considered an investment.
“In addition, the NFT was offered as a collectible and not an investment and so the product should not be considered under the financial rules of the CAP Code.
“They explained that Barcelona understood the novelty of NFTs and therefore sought to provide consumers with significant information regarding the purchase of the NFT. For that reason all risks regarding the NFT were explained in Sotheby’s Conditions of Sale.”
The final digital asset advert to be complained about came from Turtle United NFTs, which was also published on social media giant, Facebook.
Describing the advertisement, the ASA said: “A paid for Facebook ad for Turtle United, a non-fungible token project, seen in July 2022, had text that stated, “Minting Soon: Turtle United NFT. Turtle United is the 1st NFT Project that is creating a powerful movement in the Metaverse – Offering a lot of Value for its Holders whilst Investing in a plethora of Ecological projects to Save Earth. 500 Unique NFTs: The Genesis Collection.
“Free VX Collection Airdrop for Holders. Stake within the TU Ecosystem. Access to Exclusive Giveaways. First S2E Gamification Experience. Minting on 19th July. Be a part of the #TUMovement! Join Discord Now!”
Beneath the text was an image of a man taking a photo of a picture of a turtle in a gallery setting. Text on the image said, “TURTLE DEL GIOCONDO SOLD FOR 7.07 ETH.”
The ASA also emphasised its concern at the lack of response from Turtle United over the complaint, with it signalling a disregard for the code and advertising standards.
