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Coinfloor's bitcoin ad banned by UK regulator for being 'irresponsible'

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Bitcoin investments are still deemed risky and the cryptocurrency as such remains unregulated, according to most analysts. Photo: Getty Images
Bitcoin investments are still deemed risky and the cryptocurrency as such remains unregulated, according to most analysts. Photo: Getty Images

UK's advertisement regulator has banned an ad by cryptocurrency exchange Coinfloor, which promoted investing in bitcoin (BTC-USD) and was flagged as being "socially irresponsible" and "misleading."

The ad in question was aimed at pensioners.

A complainant had questioned whether the ad was misleading, because it failed to make clear the risks associated with bitcoin investments, and socially irresponsible, because it suggested that purchasing bitcoin was a good way to invest savings or pension.

The Advertising Standards Authority said the ad must not appear again in its current form.

"We told Coinfloor to ensure that future marketing communications made sufficiently clear that the value of investments in bitcoin was variable and could go down as well as up, that Coinfloor and the bitcoin market were unregulated, and that they also did not irresponsibly suggest that purchasing bitcoin represented a secure investment of one’s savings or pension," it said in its ruling.

Coinfloor said there was no suggestion in the ad that the customer’s actions constituted a wise or secure investment, and that neither Coinfloor nor the customer had claimed that investors would make money by investing in bitcoin, or recommended consumers should invest in bitcoin.

It also said that all views expressed in the ad were from the perspective of the customer who was featured, and did not represent Coinfloor’s view.

Watch: What are the risks of investing in cryptocurrency?

"The UK’s regulatory authorities are clearly worried that the price volatility and product complexity of such assets places consumers at a high risk of losses," said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.

READ MORE: Bitcoin ATMs surge 70% as it gains mainstream backers

"Despite the endorsement of high profile individuals like Elon Musk and an increasing number of firms and financial institutions ploughing money in, investing in crypto-assets should only be undertaken within a well-diversified portfolio," she added.

Nigel Green, chief executive and founder of financial advisory group DeVere, had earlier said regulation was likely to become an increasing concern for bitcoin and the wider cryptocurrency market.

"Whether crypto cynics like it or not, there’s no getting away from the fact that bitcoin is becoming an increasingly important part of the global financial system," he said.

"The move towards digital currencies is going to increase – and at pace – over the next few years. This is why financial regulators must now make regulation of the crypto sector a major priority.

Bitcoin was trading at $55,895 (40,164) on Wednesday morning, up roughly 1%.

While cryptocurrencies were under pressure earlier this week, the market is still far higher than it was six months ago. Bitcoin has rallied over 400% amid a surge of interest from institutional players like Square (SQ) and Tesla (TSLA). The surge has helped spark a broader rally for the market.

Watch: What is bitcoin?

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