Celebs have gone crypto; should you?

By Chyung Eun-ju and Joel Cho

Chyung Eun-ju

Joel Cho

Reese Witherspoon, Gwyneth Paltrow, Paris Hilton, Eminem, Justin Bieber, Jimmy Fallon ― what do all these celebrities have in common? They are all currently among the growing list of celebrities that have been endorsing NFTs.

As most of us are familiar already, NFTs have taken over the conversation in various spaces. On social media platform Twitter, debates between those in favor and those against them can be easily spotted.

Among the various trendy topics that have unfolded from the NFT discussion, one of them has caught our attention in particular: the celebrity endorsement of NFTs.

To find an example of the celebrity buzz over NFTs, all one has to do is log on to popular social media platforms, as this new crypto investment seems to have become the new "it" item among the rich and famous. "In the future, every person will have a parallel digital identity," tweeted Reese Witherspoon in January. "Avatars, crypto wallets, digital goods will be the norm. Are you planning for this?"

There is no question that celebrity endorsements have always been and continue to be used as a marketing strategy by companies to promote products, services and even political ideologies. Even more relevant nowadays, with hyper-connected social platforms, celebrities have found their own spaces to share their lives with their legions of fans.

It is also a fact that various countries have raised concerns over the deceptive nature of celebrity endorsements when not properly disclosed and regulated. These concerns have resulted in some countries adopting requirements visibly to disclose paid publicity content generated and posted by celebrities, such as the U.S. Federal Trade Commission's extensive guideline for the use of endorsements in advertising. Even social media platforms have created tools to facilitate the identification of certain content as a paid partnership.

These celebrity endorsements of NFTs should be a natural cause of unease, especially considering how quickly NFTs are growing in repute, whether it be positive or not, they have become more than a trendy topic, and now they seem to have found themselves on the lips of pop culture icons.

One of the main roots of unease may be from the association of NFTs as a product that seems to be aggressively being forced upon us, instead of developing on their own at a cautious rate. As journalist Amanda Mull from The Atlantic puts it, these celebrity endorsements are, more than anything, a stamp of approval on the concept of NFTs. "What NFT owners get is a new type of speculative asset, and for growth, they need the investment dollars of the general public to flood in after them."

Matt Damon was heavily criticized for misleading fans to invest by appearing in a bitcoin commercial framing cryptocurrency as a holy crusade saying "fortune favors the brave," an ancient Roman proverb. Kim Kardashian was sued for misleading investors to invest in a worthless digital asset through her endorsement of the EthereumMax cryptocurrency.

Kardashian's endorsement proved how much weight celebrity marketing carries in the financial world. According to Charles Randell, chair of the Financial Conduct Authority in the U.K., Kardashian's Instagram post "may have been the financial promotion with the single biggest audience reach in history."

So should celebrities be endorsing NFTs as if they were a new fad for everyone to jump on the bandwagon? The truth is that, although the public is aware of NFTs and they have seen tremendous growth last year, they are still a very volatile investment, where even their legality, especially concerning copyright and other intellectual property matters, remains murky.

So, although public stars may have the means and luxury to partake in such ventures, the great majority of people do not, and their unfiltered support for what they believe is the "future" should not be done so carelessly, as is being witnessed on social media and traditional media platforms.

The celebrity endorsements are, in some ways, a testament of the current volatility of NFTs, as they just feed into the hype and mania surrounding them. Cryptoassets, including NFTs, hold great potential, but they still require adequate regulation for proper growth, and interested investors should tread cautiously, taking what they hear in the media lately with a pinch of salt.

Chyung Eun-ju (ejchyung@snu.ac.kr) is studying for a master's degree in marketing at Seoul National University. Her research focuses on digital assets and the metaverse. Joel Cho (joelywcho@gmail.com) is a practicing lawyer specializing in IP and digital law.

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