Central Bank warns of influencers being paid to advertise ‘risky’ crypto

22 Mar 2022

Image: © filins/Stock.adobe.com

The Central Bank has yet again warned the Irish public to be cautious of investing in ‘risky and speculative’ crypto assets.

The Central Bank of Ireland has issued a fresh warning to Irish citizens against investing in crypto assets, citing high risk and low consumer protections in the booming space.

In a statement today (22 March), the Central Bank highlighted the “highly risky and speculative nature” of crypto assets as part of a Europe-wide campaign by the European Supervisory Authorities to raise awareness around the issue.

Future Human

It cautioned that retail investors buying crypto are vulnerable to being exploited and need to be alerted to the risks of “misleading advertisements” that are being pushed in Ireland.

The Central Bank pointed in particular to social media platforms, where it claimed that influencers “are being paid to advertise” crypto assets.

“In Ireland and across the EU, we are seeing increasing levels of advertising and aggressive promotion of crypto asset investments,” said Derville Rowland, director of general financial conduct at the Central Bank.

“While people may be attracted to these investments by the high returns advertised, the reality is that they carry significant risk,” she said.

Regulatory scrutiny

The warning comes at a time when countries across the world are looking to draft policies to regulate the volatile digital assets space.

Last week, crypto assets such as bitcoin narrowly escaped being potentially banned in the EU after MEPs debated limiting the use of the energy-intensive assets. Days earlier, US president Joe Biden signed an executive order setting out a comprehensive plan for crypto in the country that could pave the way for regulation.

Earlier this month, a UK regulator found advertisements by crypto company Floki Inu to be in breach of the country’s advertising standards for taking advantage of consumers’ inexperience with crypto.

The UK Advertising Standards Authority said that the ads, which were also seen on Dublin’s public transport system last year, “exploited consumers’ fears of missing out and trivialised investment in cryptocurrency”.

“Before you buy crypto assets, you need to think about whether you can afford to lose all the money you invest. Do the promised fast or high returns seem too good to be true?” added Rowland in the Central Bank’s warning today.

“People should also be aware that if things go wrong, you do not have the protections you would have if you invested in a regulated product.”

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Vish Gain is a journalist with Silicon Republic