Crackdown on risky get-rich-quick adverts for cryptocurrencies

DANGEROUS cryptocurrency promotions face a crackdown amid fears naive investors are at risk of losing everything.

About 2.3million Britons have bought digital assets such as Bitcoin or Dogecoin after a barrage of ‘get-richquick’ adverts appeared on public transport and online.

Many Hollywood stars, including Gwyneth Paltrow and Matt Damon, have also fuelled the craze by urging their millions of fans not to miss out. But the Treasury, announcing a clampdown on misleading crypto adverts yesterday, said it was concerned many investors did not understand what they were buying or the risks involved.

The Bank of England has repeatedly warned that anyone thinking of putting money into cryptocurrencies should be prepared to lose it all – claiming Bitcoin could become worthless overnight.

There are now more than 8,000 different kinds of cryptocurrency available to buy.

Under the crackdown, the watchdog Financial Conduct Authority will oversee the regulation of cryptocurrency adverts.

It means the promotions will have to stick to the same rules as other financial products such as insurance. Government said this will ensure the adverts are fair, clear and not misleading.

Chancellor Rishi Sunak said: ‘Cryptoassets can provide exciting new opportunities, offering people new ways to transact and invest – but it’s important that consumers are not being sold products with misleading claims.’

Last month Arsenal Football Club was censured by the Advertising Standards Authority for promoting risky crypto tokens to fans without enough warnings attached.

Neil Lovatt, commercial director at investment mutual Scottish Friendly, said: ‘Crypto ads have been making a mockery of financial regulation, driving a coach and collapsed horse

‘Overstate returns’

through loopholes which means that crypto adverts are deprived of balance and appropriate risk warnings.’

But critics said action from the Treasury had come far too late. Laura Suter, of investment firm AJ Bell, said: ‘You only have to glance through a few adverts to see that many overstate the potential returns on offer and fail to clearly lay out how much risk individuals will be taking.

‘While the move will help some people, it won’t stop the outright scams that have exploded off the back of Bitcoin and other cryptos soaring in price.’

Santander recently warned that around £1million of cryptocurrency scams were being reported by customers each month.