The UK Advertising Standards Authority (ASA) has ruled that the marketing of an NFT of a Johan Cruyff goal was misleading.

The one-of-a-kind non-fungible token (NFT), entitled “In a Way, Immortal”, depicts Cruyff’s flying kick for Barcelona against rivals Atlético Madrid which was dubbed “The Phantom Goal” and earned Cruyff the nickname the "flying Dutchman".  The NFT was auctioned and eventually sold for a reported €550.000 at Sotheby's.  

What is an NFT?  

An NFT, or non-fungible token, is a digital certificate of authenticity that certifies the uniqueness of a certain digital asset, for example, a piece of digital art or image.  The NFT is not the piece of art or image itself, but a method of tracking ownership.  

What are the rules for marketing NFTs?  

Because of the risks and complexities involved, marketers of cryptoassets must take care to ensure they do not mislead consumers and are not socially irresponsible in the way they promote them.  

We discussed the new Committee of Advertising Practice (CAP) Code rules regarding advertising Cryptoassets in our previous article New guidance on crypto ads from CAP.  

The issue

The Cruyff NFT was marketed by way of a paid for Google search result which, according to the ASA, omitted the following material information:  

• the risks associated with NFTs
• that auction house fees, sales tax and third-party wallet transfer fees applied; and                                   
• that there were significant restrictions on ownership rights  

FC Barcelona submitted that NFTs were not financial products and could not be considered an investment, but rather the NFT was offered as a collectible and was outside of the CAP Code rules.  They further submitted that the Google ad allowed only 30 text characters in the title and 90 text characters in the body of the ad, and on that basis they could not see how any further information could have been included in the ad.  

Further, that the Conditions of Sale laid out all the conditions of purchase including the buyer’s premium, and the limits of ownership rights, which were further explained in the terms and conditions on the FC Barcelona website.  

The outcome  

The ASA upheld all three issues and ordered that the ad must not appear again in its current form.  The ASA told FC Barcelona that their advertising must make clear the risks of NFTs by stating that they are an unregulated cryptoasset, and that their value could go down as well as up.  Further, that material information regarding fees and charges on their platform and limitations of ownership for the NFT must not be omitted.  

What does this mean?  

Consideration should be given as to the medium used to market the NFT.  Those that do not have the necessary space to include all of the required information and warnings may not be the right medium for promoting NFTs (or other cryptoassets).  

As the laws and regulation around cryptoassets develops, we may see a clearer distinction between NFTs that are designed and marketed for the investment market and those that are designed only for non-investment purposes, for example, for use in competitions.  However, until this becomes clearer, caution is urged when marketing NFTs.  

Marketers of cryptoassets should be aware of the CAP Code rules and should: 

• make it clear (in a prominent manner) that cryptoassets are not regulated by the FCA and are not protected by financial compensation schemes
• not take advantage of consumers' inexperience or credulity in dealing with cryptoassets
• not mislead consumers by omitting material information.  Advertisers must ensure that all material information is visible, including, for example, specifying that the products advertised are cryptoassets
• make clear that the value of cryptoassets is volatile and the value of investments is variable and, unless guaranteed, can go down as well as up 
• state the basis used to calculate any projections or forecasts
• make it clear that past performance is not necessarily a guide for future performance.