Marketing Compliance Guidelines for Crypto Projects

This comprehensive guide outlines essential compliance requirements, ethical considerations, and privacy best practices for marketing Web3 and cryptocurrency products. Whether you're launching marketing campaigns for non-custodial wallets, decentralized finance (DeFi) protocols, or regulated virtual asset service providers (VASPs), maintaining high standards of marketing integrity while adhering to regulatory guidelines is crucial.

This guide will be especially useful for the following businesses:

• Non-custodial wallets
• DeFi platforms, including:
  • Automated Market Makers (AMM)
  • Decentralized Exchanges (DEX)
  • Lending and borrowing protocols
  • Staking services
• Virtual Asset Service Providers (VASPs), including:
  • Custodial wallets
  • Centralized exchanges (CEXs)
  • Crypto payment platforms and processors

While this guide covers key marketing compliance considerations for these products, it's important to note that this list is not exhaustive. Also, this guidance is jurisdiction-agnostic and there might be additional regulatory requirements for launching a crypto promotion campaign depending on the country where such campaign is planned.

Any business offering products or services involving digital assets should seek qualified legal advice before launching marketing campaigns.

Key common requirements for advertising crypto products, assets, or services

The following common requirements are a comprehensive but non-exhaustive list, which provide a helpful outline of the types of regulations and rules that crypto businesses may encounter. (This information should not be construed as legal advice!) These recommendations are the result of our work with over 300 Web3 projects, many of whom required support with the launch of their crypto products into the market. Consequently, the Legal Nodes team have explored the various rules for advertising crypto products that vary from jurisdiction to jurisdiction.

Here are some essential requirements for serving advertisements related to crypto products, assets, or services.

How to present disclaimers

A crypto advertisement disclaimer is a warning included in advertisements for cryptocurrencies and any other digital assets. The disclaimer informs consumers about the risks that are associated with investments into crypto or digital assets and is therefore a critical aspect of any form of crypto advertisement or marketing campaign. In most frameworks, these disclaimers are considered mandatory and can carry large penalties if improper or inadequate disclaimers are used.

As these disclaimers act as a risk warning, there are several things to consider with how to present a satisfactory disclaimer:

1. Visible and unmissable. Disclaimers must be prominently displayed and easily noticeable by the audience. The risk warning should be legible and some jurisdictions like UK will have specific rules about it being placed in its own box, or own designated space within the advertisement.
2. Prominent placement. Disclaimers should be placed in a position where they are hard to miss, ensuring they catch the audience's attention immediately. Often, rules of prominence are quite detailed, for example, requiring the disclaimer to be “statically fixed to a screen” or “on every linked page from the promotion that relates to the investment.”
3. Simple and clear language. Disclaimers should be written in straightforward and clear language, and in the dominant language of the target audience to ensure comprehension.

Above is an example of a well-placed disclaimer

Information in the marketing materials and disclaimers

Most crypto marketing rules require you to link to further risk information and to provide other essential disclaimers as appropriate.

Risk information link

The link should take the consumer immediately to important and relevant further information regarding the risks associated with the crypto asset service being offered. Given the volatile nature of cryptocurrencies, it is crucial to provide clear risk disclosures. This includes detailing the potential for market fluctuation, the speculative nature of crypto investments, and the lack of guaranteed returns.

Essential disclaimers

Be sure to include these essential statements in your advertisement risk warning information.

• Unregulated nature: State if cryptocurrencies are unregulated (check if this applies in the jurisdiction).
• Capital gains tax: Inform consumers that profits from cryptocurrencies may be subject to capital gains tax in some jurisdictions.
• High-risk: Clarify that investing in cryptocurrencies can be highly risky.
• Variable value: Mention that the value of investments can fluctuate and may decrease.
• No regulatory recourse: Warn that there will be no regulatory recourse for any losses from such transactions.

Additional prohibitions and cautions

The following list contains prohibitions and cautions that are commonly prescribed by regulatory bodies and frameworks. However the specifics may vary across jurisdictions.

1. Avoid specific terms without legal analysis. Do not use words like "currency," "security," "custodian," and "depositories" without analyzing the legal implications in the relevant markets. Furthermore, terms like “guaranteed returns” should be avoided. These types of phrases can be misleading and are often frowned upon by regulatory authorities.
2. Prohibition on the use of minors. Do not use minors for crypto asset advertisements.
3. Comparison restrictions. Do not compare crypto assets to regulated assets.
4. Credit purchase presentation. Do not present crypto assets as suitable for credit purchase unless it's explicitly allowed by the regulation and your company is authorized/licensed for offering such product.
5. Claims on returns. Do not present return rates that are not representative and supported by documentary evidence.
6. Avoid creating urgency. Do not create a sense of urgency or a fear of missing out (FOMO).
7. Performance projections. Do not present past performances as necessarily indicative of future income.
8. Inducement restrictions. Do not induce investments through bonuses, such as refer-a-friend bonuses or new joiner bonuses.
9. Financial solution presentation. Do not present the services as a solution to financial problems.
10. Avoiding misleading claims. Ensuring that promotional materials do not make unrealistic promises or present biased information is fundamental. This aligns with the legal mandates against deceptive practices.

Above is an example of a promotion that neglects the best practices outlined here: it creates urgency, presents claims on specific returns, and doesn't include disclaimers.

It’s important to note that there are an additional levels of regulation to consider depending on the different advertising platforms that you choose to hold your marketing campaigns on. Rules for crypto asset advertisements on X (formerly Twitter), Google, Facebook and other platforms can vary. We’ll be releasing a new guide on crypto advertising platform rules soon.

Ethical marketing practices in cryptocurrency advertising

Much of the best practices for crypto project marketing and advertising hinges on good ethics. Unsurprisingly, there are ethical marketing practices for crypto currency projects that all businesses should adhere to where applicable.

Unethical crypto marketing practices

Two good examples of marketing practices that are widely considered as unethical are market manipulation tactics and pump-and-dump schemes.

• Market manipulation is the unethical practice of artificially inflating or deflating the price of a cryptocurrency to deceive investors or influence market behavior.
• Pump-and-dump schemes are a specific type of market manipulation where the price of a crypto asset is artificially increased through false or misleading statements. This attracts unsuspecting investors and is followed by a sudden sell-off by those who orchestrated the scheme, causing the price to crash.

Participants of market manipulation including pump-and-dump schemes can face severe legal repercussions, including fines and imprisonment. Engaging in or being associated with such schemes can significantly damage the reputation of businesses and individuals, impacting their standing and trustworthiness in the cryptocurrency industry.

Ethical crypto marketing practices

Ethical marketing is crucial for building and maintaining consumer trust, which is essential for a sustainable presence in the digital asset space.

Providing comprehensive and transparent information and terms and conditions are fundamental aspects of ethical practice.

Comprehensive information includes:

1. Content: Promotional content should provide a thorough overview of the cryptocurrency product, including both potential risks and rewards.
2. Transparency: All marketing materials must offer a balanced view. Do not omit material details that could mislead investors, users and other stakeholders.

Transparent Terms and Conditions:

1. Clarity: Clearly state all terms, conditions, and associated costs in promotional content to prevent misunderstandings.
2. Social media campaigns: In campaigns like those involving NFTs on social media, the terms and conditions are as crucial as the promotional rewards. This transparency helps avoid legal challenges and maintains ethical standards.

Data protection in crypto marketing

Compliance with data protection laws is crucial in digital asset marketing to avoid severe penalties and maintain ethical standards. Consider these key data protection strategies to stay aligned and compliant with relevant laws.

1. Consent-based marketing:
   1. Requirement: All data collection and marketing efforts should be based on explicit user consent.
   2. Compliance: Align with global data protection laws such as the General Data Protection Regulation (GDPR) to ensure that users are fully informed and have agreed to the collection and use of their data.
   3. Implementation: Provide clear options for users to opt-in or opt-out of data collection, and avoid using data without proper consent.
2. Transparency with users:
   1. Clarity: Be transparent about how user data is collected, used, and shared.
   2. Building trust: Honest communication about data usage helps build user trust and aligns with legal frameworks designed to protect consumer privacy.
   3. Information: Clearly outline data handling practices in privacy policies and marketing materials.
3. Regular compliance audits:
   1. Purpose: Conduct regular audits to ensure that marketing practices and data protection strategies comply with the latest legal standards and challenges.
   2. Scope: Review data collection methods, consent processes, and marketing practices to identify and rectify any non-compliance issues.
   3. Adaptation: Stay updated on evolving data protection regulations and adapt strategies as needed.

Jurisdiction-specific considerations

A key aspect of building a compliant-proof crypto asset marketing strategy hinges on the jurisdictions and their frameworks. Without looking at all the applicable jurisdictional, regional and international laws, you may end up missing critical pieces of the compliance puzzle.

To help, we’re building a crypto marketing compliance guide that covers frameworks and regulations from several jurisdictions. We’ll link it here when it’s live.

👉 Launching a decentralized protocol? Marketing compliance is only one part of the whole legal roadmap. Learn more about how we help.

What are the consequences of non-compliance?

As with most incidences of non-compliance, the consequences can be large and far-reaching. In the UK, the Financial Conduct Authority (FCA) can enforce financial penalties, request websites to be taken down, put restrictions on crypto firms and add them to the FCA warning list. Ultimately, breaches of the law would be treated as a criminal offence. There are other regulatory bodies, such as the Advertising Standards Agency that are keeping a close watch on cryptoasset marketing campaigns and will not hesitate to take swift and targeted enforcement action against any firms showing signs of non-compliance with the rules.

In the USA, there are several regulatory bodies that could inflict anything from civil penalties, criminal fines, disgorgement of illicit gains, cease and desist orders, and monetary penalties for non-compliance. In 2022, the U.S. Securities and Exchange Commission (SEC) charged Kim Kardashian for a social media post promoting EMAX tokens. She reported being paid $250,000 to do so, and ended up settling with the SEC and paying $1.6 million to cover penalties, disgorgement and interest. Kardashian is just one of many examples of regulators around the world taking a firm stance on non-compliance with crypto advertising rules.

Case #1 - BaFin vs Uniswap

In March 2023, decentralized crypto exchange Uniswap tweeted from its official Twitter account. The post—originally written in German—said "Good morning Germany! Are you still in line? Maybe you should leave your phone in your pocket. However, we have an early access link for our mobile wallet for you, download it here:"

The tweet also included a link for German users to download Uniswap's new mobile crypto wallet. Harmless, right? Not according to the German regulator BaFin who launched an investigation into Uniswap’s activities.

So what exactly prompted the investigation?

1. Regulatory compliance concerns. In Germany, providers are not allowed to sell financial services without permission from the regulator, so consequently, BaFin considered Uniswap's tweet to be a direct violation of the law.
2. Market targeting: BaFin saw the tweet as actively targeting the German market (the tweet was in German and included a German flag). Addressing the German market in this way requires proper licensing for financial services.
3. Lack of authorization: At the time of sending that tweet, Uniswap didn’t have a German presence, by way of a German company or branch, and it also didn’t have the necessary authorization from BaFin to offer financial services in Germany.
4. Decentralized nature: A key part of BaFin’s investigation pertains to the extent of Uniswaps decentralization. Was Uniswap a genuine decentralized finance (DeFi) platform? Or was there actually a person, persons, or an entity to whom regulatory obligations could be attached?

Case #2 - FCA vs Finfluencers

In July 2024, the FCA announced that it had scheduled trials for nine individuals, described as ‘finfluencers’, social media personalities who use their platforms to promote financial products and share insights and advice with followers. Each finfluencer was charged with promoting an unauthorized foreign exchange trading scheme on social media. The trials are set for February and March 2027, with potential penalties including fines and up to two years' imprisonment.

In October 2024, the FCA expanded its investigation by interviewing 20 more finfluencers under caution and issuing 38 new alerts against finfluencer-operated social media accounts suspected of containing unlawful promotions.

How Legal Nodes can support your crypto business

Legal Nodes specializes in helping cryptocurrency businesses navigate the complex landscape of marketing compliance and ethical practices. We offer comprehensive support to crypto businesses in several ways:

• Our team provides thorough compliance expertise, including detailed assessments of marketing materials and ongoing guidance on regulatory changes to maintain compliance.
• We also offer professional support for documentation and legal protection, helping create legally sound disclaimers, risk disclosures, and terms & conditions specifically tailored to your crypto offerings.
• Additionally, we ensure your business meets global standards through robust data privacy and security frameworks, including GDPR compliance, well-crafted privacy policies, and regular compliance audits.

By working with Legal Nodes, your crypto business can ensure that its marketing efforts maintain the highest standards of compliance and ethical practice while building trust with your target audience. Our team stays current with evolving regulations to help protect your business from potential legal issues and reputational risks. To learn more about how we can help you, contact us today.