After consultation with stakeholders in the cryptocurrency industry, the Advertising Regulatory Board (“ARB”) added a new paragraph 17 to the Code of Advertising Practice (“Code”) aiming to protect consumers from exaggerated advertising and promises of unrealistic returns when investing in cryptocurrencies. These new advertising rules form part of a broader strategy to better regulate the cryptocurrency industry.
The newly inserted paragraph 17 in section 3 of the Code determines the following:
Any advertisement by a crypto asset provider must inform the consumer in clear and understandable language about the volatility of crypto assets. Advertisements must therefore expressly state that investing in crypto assets may result in the loss of capital as the value is variable and can go up as well as down
Clear communication on the returns, features, risks and benefits associated with a particular crypto asset product is essential.
The advertisement should not in any way try to contradict the warnings about the projected risks, benefits and features of a crypto product or service.
Advertisements about crypto assets should have or communicate the following: “Investing in crypto assets may result in the loss of capital”.
The crypto asset provider must provide documentary evidence supporting how rates of returns, forecasts or projections are calculated.
Consumers must be made aware that any positive historical performance does not imply positive future performance. For example, the cryptocurrency market performing well in a particular month, should not in any way be used to create the perception that the market will perform well again in the following month.
Advertisements by crypto asset service providers who are not registered credit providers are prohibited from advertising and providing crypto assets on credit or through payment arrangements to consumers. Influencers or ambassadors used to promote crypto asset products or services may share factual information only, and may not offer advice on trading or investing in crypto assets or make promises regarding benefits or returns.
The ARB has stressed the importance of ethical advertising in the cryptocurrency industry and requires crypto advertisements by advertisers to promote transparency and provide a balanced message about the projected benefits, risks and features of cryptocurrency. These new advertising rules can only benefit consumers, who should take care when dealing with service providers or advertisers that do not adhere to these new rules.
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