Crypto is sitting out the Super Bowl after a miserable year

Well, that was quick.

Less than a year ago, when the Rams and Bengals duked it out on the SoFi Stadium gridiron for Super Bowl LVI, more than 100 million viewers were greeted with ads promising a chance to jump on the the wave of the future: cryptocurrencies, non-fungible tokens (or NFTs) and a frothy ecosystem of blockchain-based digital commerce.

LeBron James did a promo for the Crypto.com trading platform. Coinbase, another crypto exchange, spent $14 million on a QR code gimmick. And who could forget that Larry David ad suggesting that crypto was an invention on par with electoral democracy and the wheel?

It was a bold marketing play that was so eye-catching that people dubbed the event the “Crypto Bowl” even before the game took place. And yet, this year crypto is expected to be almost entirely absent from proceedings. Fox Sports’ executive vice president of ad sales, Mark Evans, told the Associated Press that there would be “zero representation” from crypto during the broadcast.

“It’s definitely positive that there will be no celebrity-backed crypto ads in this year’s Super Bowl,” Bonnie Patten, executive director of the consumer watchdog organization Truth in Advertising, said in an email. “If the past 12 months have taught us anything, it’s that consumers shouldn’t take investment advice from celebrity endorsements.”

It’s an impressively quick reversal, but hardly surprising.

In the time since Los Angeles hosted the last Super Bowl, the broader crypto-economy – which includes digital currencies, tradable digital artworks and a grab bag of other online assets – has sunk into a undeniable decline.

The crypto market entered a prolonged decline around the middle of last year (although bitcoin liked it a little rally in January). Coinbase and other crypto firms are lay people off. NFT sales are shrinks. Major industry players, such as Celsius, Luna and Three Arrows Capital, have collapsed, while others, such as the developer behind the crypto-centric video game “Axie Infinity”, faced repeated scandals. Hacking and scams continue to flood the space; one regulatory backlash seems either imminent or already here.

Perhaps the most visible example of crypto’s fallen prestige, however, is the spectacular downfall of FTX, the same crypto exchange David (of HBO’s “Curb Your Enthusiasm” fame) last time framed as a turning point in human civilization.

FTX filed for bankruptcy in November, and its former chief executive Sam Bankman-Fried – once seen as a child prodigy – now sits under house arrest while facing federal charges of money laundering and fraud. (Bankman-Fried has begged not guilty.)

“The FTX collapse has left a stigma on the industry, even though much of FTX’s alleged fraud is what I would refer to as plain vanilla fraud,” said Josh White, assistant professor of finance at Vanderbilt University and former financial economist at the Securities and Exchange Commission. “This stigma means they face high scrutiny from regulators and Congress … so the decline in ad spending is justifiable.”

The era of famous people endorsing crypto apps is likely to be over for the foreseeable future, White added via email. (When the crypto market was better, you could find Jimmy Fallon and Paris Hilton showing off NFTs on late-night TV, or Post Malone and the Weeknd putting crypto references into a music video.)

“Instead of using celebrities to help legitimize or accelerate crypto adoption or attract new customers, many of the exchanges, such as Coinbase, use their money to advocate for or petition for regulatory or legal changes,” White wrote.

Evans, the Fox Sports chief, told the AP that four crypto companies had ads in the works, but the plans collapsed when Bankman-Fried fell from grace. AdAge reports that a small game development company, Limit Break, has a 30-second NFT giveaway set to air.

Instead of the crypto industry, viewers can expect to see pitches from streaming services, alcohol and snack brands, movie studios and car companies.

However, that will not be the end of the crypto drama.

David, Tom Brady and a number of other A-listers who promoted FTX are facing a federal class-action lawsuit alleging they declared unregistered securities.

Whether that case, or others like it, will put a permanent damper on the long-standing ties between crypto capital and celebrity influence remains to be seen.

For now, it’s also not clear how long it will take the Super Bowl ad market to christen crypto’s supposed successor: generative artificial intelligence, or software that can produce (nominally) original text, art and media. Generative AI modules such as very popular ChatGPT has taken the internet by storm in recent months and is now receiving a lot of attention from Silicon Valley mainstays such as Google and Microsoft. They seem like a shoe-in for Big Tech’s next big obsession.

This may not be the year generative AI ascends to the throne – a ChatGPT powered one advertisement for avocados was reportedly in the works but could not be finished in time. Still, it’s probably only a matter of time before artificial intelligence enters the big game.

Will Super Bowl LVIII be the first to run ads made by machines? Come back next year to find out.