IRISH watchdog ADVERTISING STANDARDS says it is monitoring developments in other countries after UK authorities this week unveiled new regulations aimed at tackling misleading advertising for cryptocurrencies.
Under the new UK regime, details of which were made public on Tuesday, the promotion of risky crypto assets like Bitcoin or Dogecoin and crypto exchanges – apps where investors can buy and trade coins – like Crypto.com and Coinbase , will now be subject to the disclosure rules of the UK Financial Conduct Authority (FCA).
This means that advertisements for crypto will be treated the same as other financial products such as stocks and insurance.
Cryptocurrencies are digital assets.
Unlike normal currencies, there is no centralized system to track and verify transactions made using cryptocurrencies such as Bitcoin or Dogecoin. Instead, crypto transactions are recorded by users on a global network of computers using cryptography.
Advertising and promotion of crypto-assets and exchanges by influencers, celebrities and sports stars has become increasingly common alongside the growing popularity of the asset class in recent years.
But across the EU, concerns are beginning to emerge over ad campaigns that many regulators say underestimate the risk associated with the unregulated asset class.
The Central Bank of Ireland is responsible for regulating the advertising of financial products and services by regulated financial firms only.
However, largely because crypto products are currently unregulated in Ireland and the European Union, advertisements currently fall under the jurisdiction of the Advertising Standards Authority of Ireland (ASAI).
Since 2019, the ASAI told The newspaper that he received four complaints about three separate crypto advertisements.
Two complaints related to adverts promoting a ‘coin’ called Floki Inu, named after Tesla founder Elon Musk’s pet dog, which appeared on Dublin bus sidings last year , reported the Business Post just before Christmas.
Like its predecessor Dogecoin, Floki Inu’s “status as a meme-coin is based on the fact that it has no intrinsic value,” Aaron Rogan reported, “but speculation is driven by online jokes and internet forums urging people to invest”.
In response to questions from The newspaper, an ASAI spokesperson said the four complaints related to crypto advertising are still under investigation.
“The ASAI Code contains both general rules relating to truthfulness and specific rules relating to financial advertising,” the spokesperson added.
“We are aware that other jurisdictions are increasingly concerned about cryptocurrency advertising, and we are monitoring developments.”
Earlier this week, the Spanish government also announced tougher rules regarding advertisements for crypto-assets.
Under a regime that will come into effect from February in Spain, advertisements for cryptocurrencies and other crypto-assets must be “clear, balanced, unbiased and not misleading”, the country’s securities regulator has said. .
Crypto service providers must notify the regulator of advertising campaigns aimed at 100,000 or more people with at least 10 days notice.
These rules also apply to the promotional activities of anyone advertising on behalf of third parties, such as social media influencers.
This follows the regulator’s public rebuke of former Barcelona soccer star Andres Iniesta in November after he promoted cryptocurrency exchange Binance on his Twitter and Instagram accounts.
In a tweet sent to Iniesta in November, Spain’s National Securities Market Commission recommended that he be “completely” informed about cryptocurrencies “before investing in them or recommending others to do so.” .
The Central Bank of Ireland has in recent years issued a number of warnings to consumers regarding investing in cryptocurrencies.
In response to questions from The newspaper, a spokesman for the Central Bank said: “We reiterate these warnings.
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“More generally, consumers considering investing in a product should carefully consider their investment objectives, level of experience and risk appetite.
“It is important that consumers take the time to review all material information about the investment, how it works and the associated risks. The value of an investment can go down as well as up and consumers should be careful not to invest money they cannot afford to lose.
The spokesperson added, “The Central Bank notes the pace at which the crypto ecosystem is growing and the Central Bank continues to identify and closely monitor the risks associated with crypto assets.”
Gabriel Makhlouf, Governor of the Central Bank of Ireland, is among many regulators around the world who have sounded the alarm about the risk of cryptocurrencies, which are generally more volatile and vulnerable to price fluctuations than investments. traditional such as bonds or stocks.
In a blog post last year, Makhlouf said he believed the growing crypto bubble was not, at the moment, a big threat to Irish or global financial stability.
Should they become more popular, however, “their volatility could lead to losses, which could have implications for financial stability”, particularly if investors borrow to finance their investments.
Comparing the current enthusiasm for Bitcoin and Ether, Makhlouf said the phenomenon was comparable to the Dutch tulip bubble – often known as “Tulip Mania” – of the 17th century.
The European Union is developing a financial regulatory framework for cryptocurrencies. A major part of this is the Crypto-Asset Markets Framework (MiCA), which is expected to be in place by the end of the year.
MiCA aims to harmonize the approach to digital assets across the block, introducing a licensing system for crypto-asset issuers and service providers.
— Additional PA and AFP reports