UK ASA Bans A Misleading Ad of Crypto.com from Promoting Its NFT Platform

The UK ASA (Advertising Standards Authority) has banned a paid-for Facebook ad from Crypto.com promoting its NFT platform.

The ASA said the ad was misleading because "it failed to illustrate the risk of investing in NFTs" and "it didn't make clear that fees would apply" – as required by the CAP (Committee on Advertising Practice) Code.

The CAP Code requires that marketing communications for investments make clear that the value of investments is variable and, unless guaranteed, may go down as well as up, and also that significant limitations and qualifications are stated and presented clearly.

Crypto.com said that it did not believe the NFTs available on their platform to be financial in nature, as NFTs were at the time excluded from the scope of financial promotion reforms in a HM Treasury consultation paper.

The ASA said that NFTs could be used as an investment even if they were not directly marketed as a product that could generate a return.

"The use of the word 'trade' [in the ad] implied they [NFTs] could be exchanged with the intention of generating a profit. We considered therefore that the ad promoted NFTs on their platform as investments."

The ASA's online advice does consider NFTs to be cryptoassets and subject to the financial rules of the CAP Code, Crypto.com acknowledged.

The ASA also noted that references to "trade" and "mint" within the ad meant that the fees payable on minting and trading was material information that consumers would want to know upfront before purchasing an NFT.

"For that reason, because the ad omitted material information, we concluded that the ad was misleading," the ASA said. "The ad must not appear again in its current form."

In January, the ASA also banned two other Crypto.com ads, saying they were were misleading because they failed to illustrate the risk of the investment, took advantage of consumers' "inexperience or credulity", and failed to make clear limitations to purchasing cryptocurrency with a credit card.