South African Regulator Takes Action Against False Crypto Advertising Claims

[ad_1]

On January 23, South Africa’s Advertising Regulatory Board (ARB) introduced new cryptocurrency-focused rules into the country’s advertising code to protect consumers from misleading advertising.

The new guidelines aim to ensure that cryptocurrency advertisements accurately state the risks associated with all cryptocurrency investments, making it clear to consumers that they are at risk of losing their capital due to market volatility.

“Advertisements must expressly and clearly state that investing in crypto assets may result in a loss of capital, as the value is variable and may increase or decrease,” the ARB said. Additionally, they cautioned that the overall message of the advertisement should not contradict the warnings about potential money loss stated above.

Ads should thoroughly explain the risks and benefits associated with the cryptocurrency product or service they are offering.

Misleading advertising based on past performance prohibited

Another important aspect of the new guidelines is that crypto-related businesses must not use exaggerated or misleading claims in their advertising. This includes making claims of high returns or low risk without providing any evidence to back them up.

Companies should also be transparent about their fees and charges and clearly communicate any risks or limitations associated with their products or services. According to the ARB, advertising of crypto-related services must clearly state that “past performance” is not indicative of future returns that cryptocurrencies may experience. This is in line with broader regulations applied to financial services, as any advertising for financial products must include similar disclosure.

Likewise, they noted that those who are not registered as credit providers “should not encourage the purchase of crypto assets on credit.” However, they may promote information about payment methods used by crypto-asset service providers.

Influencers and ambassadors should only share factual information

As for ambassadors and influencers, the ARB has determined that these people can only promote a product if they comply with the requirements of regulators.

Ambassadors or influencers who do not meet the regulator’s criteria for qualified investors “may only share factual information” without giving additional advice on trading or investing in crypto assets. This is a response to the controversy that arose during the bitcoin bull run when many crypto companies released several controversial advertisements featuring famous global celebrities to attract as many customers as possible.

For example, Crypto.com launched one of the most aggressive advertising campaigns in the ecosystem with the participation of actor Matt Damon, who invited his millions of followers to invest in the platform under the slogan “Fortune smiles to the brave”.

Following the massive crypto market crash and the loss of thousands of investors, South Park released a video mocking Matt Damon, Gwyneth Paltrow, investor Larry David and tennis player Naomi Osaka, who used their image to promote this type of investment.

The new South Park movie aired tonight.

They mocked Matt Damon selling out for Crypto and

uh

good pic.twitter.com/FTIXSbRRbL

— Dyme (@CryptoParadyme) July 13, 2022

Some found it funny, but ARB started to take it seriously.

SPECIAL OFFER (Sponsored) Binance Free $100 (Exclusive): Use this link to sign up and receive $100 free and 10% off Binance Futures fees for the first month (terms).

PrimeXBT Special Offer: Use this link to sign up and enter code POTATO50 to receive up to $7,000 on your deposits.

[ad_2]