When Facebook announced it would not publish paid posts for ICOs, this was a strike at the heart of most ICO marketing campaigns and their social media teams had to quickly rethink their approach. However, Jonathan Keane, writing for Coindesk points out that there may be an even more “intimidating threat” around the corner, coming from global regulators.
Facebook’s statement said that it was banning “misleading or deceptive” adverts about financial products and services, with the emphasis being on anything related to Bitcoin and ICOs. In effect it was a blanket ban on all adverts for crypto startups, because Facebook can’t distinguish between the fair offer and the fake one.
This is just one marketing avenue but Keane quotes Johanna R. Collins-Wood of legal group Pepper Hamilton. She is a member of the law firm’s blockchain group, and she said: “The regulators will look at advertisements put out by the company. That’s always something they’re going to look at.”
Others are concerned about the large amount of suspect adverts for ICOs and crypto exchanges amongst others, and there are many who see it as an “immensely popular Wild West” where the legitimate business vies with the scammers for the same space. And, as Keane points out, “all the issuers and entrepreneurs in the space are still grappling with just what kinds of claims they can make in their marketing.” It is also certain that the blockchain industry needs to police itself before the regulators do the job for them and impose more stringent rules than is strictly necessary.
For example, on 22nd February, France’s stock market regulator, the L’Autorite Des Marches Financiers (AMF), released a statement about possibly curbing advertising on cryptocurrency-tied derivatives. This is not the only regulatory financial authority looking at the claims made in advertising; the SEC and CFTC are also examining the public statements made by companies in the sector.
The situation is made worse by the fact that there are no formal guidelines in place about what an ICO can claim in its marketing messages, and none of the advertising industry regulators have yet to formulate a policy. This leaves the blockchian-based startups in the dark, yet they are being penalised by platforms like Facebook. So, why not apply the existing rules for false and misleading adverts to the blockchain industry?
Here is what Keane discovered: “New Zealand’s Advertising Standards Authority told CoinDesk it had not received any crypto-related ad complaints, and the UK’s ad standards body said they had received less than 10 cryptocurrency-related ad complaints so far. A spokesperson from the UK Advertising Standards Authority responded to this by saying, “And none have resulted in us finding grounds for an investigation.” The FCA, which does have a responsibility for financial advertising said, “it has no position on crypto ads.”
Currently the answer lies with lawyers who are telling ICO clients to comply with securities laws, and the expectation is that this compliance will eliminate any issues over misleading advertising. Google and Twitter also seem to believe that their existing advertising rules are robust enough to cover ICO adverts.
Meanwhile, many ICOs are policing their own messaging and have internal procedures that guard against any outrageous claims about low risk and large returns.
Will other channels follow Facebook, or like the advertising regulators, will they continue to take a ‘wait and see’ approach. I suppose we will also have to wait and see.