South African Regulator Calls for Risk Warning in Crypto Ads
- Crypto influencers are required to present facts rather than propose returns when advertising a product.
- South Africa saw a huge increase in the use of cryptocurrencies in 2022, and regulators have sought ways to regulate the industry.
Cryptocurrencies have grown in popularity in South Africa, particularly among the younger generation. However, natives also face the possibility of incurring losses due to the volatile nature of cryptocurrencies or falling victim to scam projects.
A new guideline from South Africa’s Advertising Regulatory Board (ARB) mandates crypto firms to warn potential customers of the possible risks involved in their investments. The ARB’s decision is aimed at protecting natives from unethical advertising.
According to the ARB, crypto ads “must expressly and clearly 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.” The ARB also states that advertisements must not contradict cautions on possible investment losses.
Advertising for certain goods and services must, according to the ARB, be made in a way that is “easily understandable” to the target audience. Furthermore, crypto ads must include balanced information about returns, characteristics, advantages, and concerns about the project or coin.
Projects are also required to share adequate information about rates of return and how they arrived at their calculated returns. Additionally, projects are not to leverage past performance to promote or entice users. Products should not be presented in a way that creates a positive impression of the product.
The ARB’s new policy also sets new standards for social media influencers seeking to promote cryptocurrency projects. Ambassadors and influencers are required to share factual statements and not make claims about guaranteed rewards or offer trading advice.
The ARB is working to ensure that crypto users are aware of the risks associated with investing in cryptocurrencies. Unsuspecting investors in South Africa have been the victims of scams and frauds, forcing authorities to find ways to clean up the sector and make it difficult for con artists to operate.
Regulators in other parts of the world have also increased their scrutiny of crypto advertisements. Last year, reality star Kim Kardashian was forced to pay $1.2 million to the Securities and Exchange Commission after failing to disclose that she received payment to promote EthereumMax on her Instagram.
Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.
