New guidance on crypto ads from CAP

The Committee of Advertising Practice (CAP) has issued guidance on ads for cryptoassets following an increase in the number of Advertising Standards Authority (ASA) complaints about crypto ads.

What are cryptoassets?

Cryptoassets are defined by the Financial Conduct Authority (FCA) as: “cryptographically secured digital representations of value or contractual rights that use some type of distributed ledger technology (DLT) and can be transferred, stored or traded electronically.”

Below are some high level examples of different products that fall under the term “cryptoassets”:

  • Cryptocurrencies are probably the most well-known form of cryptoasset. A cryptocurrency, such as Bitcoin, is a digital currency that uses encryption techniques to limit how many units of currency are available and operates independently of a central bank.
  • Utility tokens can only be used within a specific ecosystem and allow users to perform particular actions in a particular environment. Utility tokens can be used on a platform to redeem a special service or receive preferential treatment to services. They are primarily used by companies to raise interest in their products with one example being “Fan tokens” used by sports clubs.
  • Security Tokens are digital contracts for fractions of an asset that already has value such as a house, car or shares. Using security tokens mean that investors in the digital world can preserve their financial stake of an asset on the blockchain. The blockchain is a public ledger which is used to verify and secure transactions.
  • Non-fungible Tokens (NFTs) are a digital certificate of authenticity that certifies the uniqueness of a certain digital asset, for example, a piece of digital art or image. The NFT is not the piece of art or image itself, but a method of tracking ownership. So, if somebody sells you an NFT for a digital file, that does not stop them sending copies of that file to other people.

The issue

Cryptoassets such as cryptocurrencies are increasing in popularity and although they are becoming more well-known, they can be fairly complex and volatile as an investment. Cryptocurrencies are only regulated in the UK for money laundering purposes. UK cryptoasset businesses must comply with the Money Laundering Regulations and register with the FCA.  However, they are not regulated by the FCA for any other purpose and do not benefit from the protections from the Financial ombudsman Scheme or Financial Services Compensation Scheme.

As cryptoassets (such as cryptocurrencies and non-fungible tokens (NFTs) grow in popularity, there has also been an increase in the number of ASA complaints about their advertising.

What does the guidance say?

Because of the risks and complexities involved, advertisers of cryptoassets must take care to ensure they do not mislead consumers and are not socially irresponsible in the way they promote them.

The guidance sets out clear principles for advertisers to follow and states that marketers of cryptoassets should:

  • make it clear (in a prominent manner) that cryptoassets are not regulated by the FCA and are not protected by financial compensation schemes.
  • not take advantage of consumers' inexperience or credulity in dealing with cryptoassets (as per CAP Code rule 14.1). Placement of the ad and intended audience should be considered, for example, a specialist financial publication will have different considerations with regards to financial jargon than an outdoor poster.
  • not mislead consumers by omitting material information. Advertisers must ensure that all material information is visible, including, for example, specifying that the products advertised are cryptoassets. This is particularly relevant for products such as “Fan Tokens”, which, as adjudications have shown, could be misconstrued by consumers as something other than a cryptoasset.
  • make clear that the value of cryptoassets is volatile and the value of investments is variable and, unless guaranteed, can go down as well as up.
  • state the basis used to calculate any projections or forecasts. The basis used to calculate any rate of interest, forecast or projection must be “apparent immediately”.
  • make it clear that past performance is not necessarily a guide for future performance.

Why comply?

The ASA has stated that it will be proactively monitoring and enforcing offending crypto ads after previously stating that crypto ads was a ‘red alert’ priority issue.

The ASA issued an Enforcement Notice in March 2022 which stated that it has been in close consultation with the FCA and that patterns of non-compliance will be reported to the FCA, Trading Standards and any professional industry body of which the offending marketer is a member.

Practical tips

Marketers who want to advertise cryptocurrency products should:

  • comply with the new CAP guidance on cryptoassets
  • familiarise themselves with the Financial products section of the CAP Code
  • seek legal advice if unsure – this remains a high-risk area!


This information is for general information purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. Please contact us for specific advice on your circumstances. © Shoosmiths LLP 2024.



Read the latest articles and commentary from Shoosmiths or you can explore our full insights library.