The UK Advertising Standards Authority (ASA) has published a ruling against online broker eToro UK, finding its crypto ad was misleading and irresponsible. ASA investigated two issues, both of which were upheld.

A paid for display ad for eToro, a stocks and cryptocurrency trading platform, was seen on 27 August 2021 on the Yahoo Finance website. The ad included text which stated “Invest in the world’s top crypto’s with one click” and “Discover eToro’s unique BitcoinWorldwide offering, a ready-made portfolio, holding the world’s leading cryptoassets”.

The ASA challenged whether the ad was:

1. irresponsible because it took advantage of consumers’ inexperience or credulity; and
2. misleading because it failed to illustrate the risk of the investment.

ASA understood cryptocurrency investment itself was sophisticated and complex, subject to frequent change in value and one that could potentially lead to large losses. In the absence of any other information to the contrary, ASA considered that consumers would interpret the overall impression from the ad to be that investment in cryptocurrency was simple and suitable for anyone, even those with limited knowledge of the sector and regardless of their personal financial circumstances.

ASA noted that eToro had discussed with the FCA the financial promotions. The body considered, however, that the cryptocurrency product offered by eToro in the ad was not regulated by the FCA and therefore not subject to the FCA’s financial promotions rules.

ASA also considered that consumers would be less likely to be familiar with cryptocurrencies than with other well-established investments such as ISAs or shares. Therefore most consumers were unlikely to be aware that Capital Gains Tax (CGT) had to be paid on profits in excess of the annual CGT allowance from investing in cryptocurrency, in the same way they would for more traditional investments.

The ad did not contain any information that CGT could be payable on profits from investing in cryptocurrency, and ASA considered the potential tax implications were therefore not made sufficiently clear to consumers considering investing in cryptocurrency to enable them to make an informed decision.

For those reasons ASA considered that the ad took advantage of consumers’ inexperience or credulity by suggesting that investing in cryptocurrency was simple and suitable for anyone regardless of personal financial circumstances or understanding of the product and by not making clear that CGT could be payable on profits from investing. The body therefore concluded the ad was irresponsible and breached the Code.

On that point, the ad breached CAP Code (Edition 12) rules 1.3 (Social responsibility), and 14.1 (Financial products).

The CAP Code required that marketing communications for investments made clear that the value of investments was variable and, unless guaranteed, could go down as well as up, and also that significant limitations and qualifications were stated and presented clearly. ASA understood that cryptocurrency was a volatile investment, subject to frequent change and one that could potentially lead to large losses.

Because the ad did not include any risk warning making consumers aware that cryptocurrency could go down as well as up, or that the cryptocurrency was unregulated in the UK, ASA concluded that the ad was misleading.

On that point the ad breached CAP Code (Edition 12) rules 3.1 and 3.3 (Misleading advertising), 3.9 (Qualification) and 14.4 (Financial products).

The ad must not appear again in the form complained about. ASA told eToro (UK) Ltd to ensure that they did not irresponsibly take advantage of consumers’ lack of experience or credulity by implying that cryptocurrency investment was straightforward or accessible to everyone regardless of personal financial circumstances or understanding of the product and by not making clear CGT could be due on cryptocurrency profits.

ASA also told eToro to ensure that their future ads made sufficiently clear that the value of investments in cryptocurrency was variable and could go down as well as up and that cryptocurrency was unregulated in the UK.