According to FINRA, cryptocurrency firms often claim that digital assets function like cash and cash equivalents, but this is false. Also, advertising often compares cryptocurrencies to other assets, such as stocks, which misleads users about the regulation of digital assets in a similar way to securities.
As part of the study, FINRA examined 500 cryptocurrency advertisements to determine whether companies were complying with broker-dealer communications regulations. Advertising must be “fair and balanced” and not contain “exaggerated, false, unsubstantiated or suggestive” claims. And, according to the regulator, most crypto firms do not comply with fair advertising requirements.
“With the growth of the market and increased interest in crypto assets, the potential harm caused by false advertisements has also increased. It is necessary to convey to the user all the associated risks and features when investing in digital assets,” said Ira Gluck, senior director of FINRA’s advertising regulation division.
Let us recall that back in early 2022, FINRA released updated rules to protect cryptocurrency investors.
Source: Bits
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