The UK regulator has banned an advertisement from Crypto.com shared on Facebook. The ad was reportedly needed to educate views on the risks involved in NFT trading.
UK advertising regulator, ASA, announced Its decision on 21 December. The ad surfaced on Facebook in July 2022 instructing potential investors and NFT enthusiasts to purchase the token.
According to the regulator, the advertisement was misleading. It failed to inform users about the risks involved in NFTs due to their high volatility and left out important information related to applicable gas fees.
in defence, crypto.com responded to claims that NFTs were not recognized as financial derivatives on the platform. According to the crypto trading platform, a recent HM Treasury consultation paper excludes NFTs from the range of economic reforms identified by the government.
Crypto.com argues that the ad was strategically marketing the platform and not the NFTs being traded or mined. Financial awareness of NFTs did not apply in this case, the company concluded.
UK advertising regulator turns against FCA
However, the ASA emphasized that NFTs are volatile digital assets that are subject to massive price fluctuations and can potentially lead to huge losses. For this reason, the regulator argues that a disclaimer was necessary, decriminalizing the term “trade” as used in commercial as it entices users to buy and sell NFTs in the hope of making a profit.
As a result, Crypto.com had to permanently abandon advertising or make adjustments to include important information such as the fees and risks involved in NFTs in its reforms.
The ad ban is contrary to a recently issued rule hmrc law that identified NFTs eligible for the Investor Management Exemption. The decision came as part of the UK’s strategic plan to enhance the country’s position as a financial hub for offshore investors by encouraging out-jurisdictional investment from non-citizens.