Yahoo Finance Arsenal crypto-based fan token ad illegal, says watchdog
Crypto-based fan tokens promoted by Arsenal football club on its website and Facebook page have been banned by the UK’s Advertising Standards Authority (ASA) for breaking its rules.
“The ads must not appear again in the form complained about,” the ASA said.
Many top-tier football clubs offer fan tokens but Arsenal is the first against which the ASA has taken action.
The club partnered with a company called Socios to provide consumers with access to a digital platform where they could interact with each other and collect tokens, which must be bought with a cryptocurrency, to engage with club decisions.
One of the ads in question stated that Arsenal players Ben White, Calum Chambers and Kieran Tierney "have had their say, But what song do you want to hear when we win? Download the Socios app to get your token and vote."
During the ASA's investigation, Arsenal said the tokens were not promoted as financial products or an investment vehicle and they did not encourage their trading.
tI also explained the Socios app had a disclaimer that stated tokens do not represent financial instruments or any form of financial product and are meant to be used for entertainment and fan experience purposes only.
Read more: Crypto ‘red alert’ issued by UK’s advertising watchdog
But the ASA told Arsenal future ads "must not not trivialise investment in cryptoassets" or "irresponsibly take advantage of consumers’ lack of experience or credulity by not making clear that capital gains tax could be due on cryptoasset profits.
It also told the football club it needs to make it clear that cryptoassets are unregulated and not omit important information like the fact that fan tokens have to be bought using a cryptocurrency.
Commenting on the ruling an Arsenal spokesman said: “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.”
‘’The ASA has taken on the role of referee in the high stakes game of crypto trading, with the whistle blown on Arsenal football club, the latest in a string of rulings against companies which are flogging coins or tokens without high risk warnings," said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.
"ASA officials are running the line, assessing every complaint, but with scant other regulation governing crypto assets, and so many cries of foul springing up across social media in particular, it’s becoming an increasingly difficult play to monitor."
She added that "fans should think very carefully before parting with their money, as cryptoassets are very complex, are difficult to value and are highly volatile."
Last week, the watchdog said cryptoassets such as bitcoin (BTC-USD) and ethereum (ETH-USD) are a red alert priority for it, as it banned seven cryptocurrency ads for breaking its rules, including ones by Coinbase (COIN) and Papa Johns (PZZA).
The Advertising Standards Authority (ASA) said its rulings follow proactive monitoring of cryptoasset ads, and form part of a wider project that will eventually shape specific guidance around advertising these products in 2022.
Read more: Non-fungible tokens: What are NFTs and why are they creating such a stir?
It added that consumers need to know about the risks of investing in cryptoassets and companies should make sure that their ads aren’t misleading or socially irresponsible, and don't take advantage of consumers’ lack of awareness around these "complex and volatile products".
Streeter said non-fungible tokens (NFTs), which have been described as modern day trading cards, are seen as valuable streams of fresh revenue for football clubs.
But she added that there is a risk that the initial frenzy of interest in many of today’s NFTs will wane, and the assets could end up being almost worthless, in the same way as once sought-after CDs, vinyl or even popular football players "have ended up in the bargain bin."
Watch: What are the risks of investing in cryptocurrency?
