British authorities have banned advertisements by Arsenal Football Club promoting fan tokens due to taking advantage of consumers’ lack of knowledge regarding cryptoassets.
The Facebook and website posts included a video featuring Arsenal players Ben White, Calum Chambers and Kieran Tierney that read: “Fans should be aware that they could lose some or all of their money invested. We advise you to spend only what you can afford and seek independent financial advice if required.”
Britain’s Advertising Standards Authority (ASA) investigated whether the ads took advantage of consumers’ inexperience in cryptoassets — a digital currency that is decentralised and not controlled by a single entity such as a bank.
The ASA also considered whether the messages did not make clear the “token” was a cryptoasset, which could only be obtained by opening an account and exchanging with another cryptocurrency.
Arsenal, however, said Wednesday that the tokens were used to encourage fan participation and were different to cryptocurrencies — virtual currencies used as a means of payment.
The ASA said financial authorities classed utility tokens as cryptoassests, with tax payable on any profit, and a product that had the potential to lead to large losses.
“We acknowledged that the ads did not promote the fan tokens as an investment or financial product,” read a statement from the ASA.
“However, the product was a cryptoasset regardless of how it was promoted and the ads did not contain any information that Capital Gains Tax (CGT) could be payable on profits from investing in cryptoassets.
“We therefore considered the potential tax implications were not made sufficiently clear to consumers considering investing in it.”
The ASA added: “Therefore, because the ads trivialised investment in cryptoassets and took advantage of consumers’ inexperience or credulity by not making clear that CGT could be payable on profits from investing, we concluded the ads were irresponsible and breached the (ASA) code.”
An Arsenal spokesman told Britain’s Press Association: “We take our responsibilities with regard to marketing to our fans very seriously.
“We carefully considered the communications to fans regarding our promotions and provided information regarding financial risks.
“We will endeavour to comply with the ASA’s guidance regarding future communications in this fast moving area, however we will be seeking an independent review of the ASA’s ruling to seek greater clarity on the ASA’s current position.”
There are concerns that the anonymity provided by cryptocurrencies can be exploited by criminals looking to launder money or scam the general public.