If you thought the U.K.’s recent spate of cryptocurrency advertising bans was tough, at least it was targeting individual companies’ advertisements, take a look at what happened in Spain and Singapore today.
Read more: Ban Of “Misleading” Ads By UK Regulator Revives Debate Over Crypto Regulation
Spain’s National Securities Market Commission just established a preapproval mandate for any cryptocurrency ad aimed at 100,000 or more people and added mandatory caution language in the vein of cigarette ad health warnings.
Singapore just banned it outright.
As cryptocurrencies gain broader public mindshare around the world, there has been a rising tide of concern that retail investors do not understand just how risky cryptocurrency can be. Even the biggest and best-known cryptocurrencies like bitcoin and ether are wildly unstable compared to stocks, rising and falling 5% to 10% or more in a few hours on a regular basis.
And, the growing interest in decentralized finance adds a whole other dimension of risk thanks to the wide availability of highly leveraged futures and options markets, and the frequency with which DeFi lending platform borrowers are slapped with margin calls that see their collateral sold off as its price tumbles. Then there’s fraud, rug pulls, nine- and 10-figure exchange and protocol hacks.
See also: PYMNTS DeFi Series: DeFi’s Very Real Risks
Singapore Just Says No
On Monday (Jan. 17), the Monetary Authority of Singapore released a new set of “Guidelines On Provision Of Digital Payment Token Services To The Public.”
Referring to crypto exchanges and other licensed companies that provide cryptocurrency services as digital payment token, or DPT, providers, the MAS warned that ads must avoid portraying crypto trading “in a manner that trivializes the high risks of trading in DPTs” or suggests that it is appropriate for the general public.
Specifically, that includes a ban on advertising their “services in public areas in Singapore or through any other media directed at the general public in Singapore.” Along with exchanges, this includes banks and financial institutions licensed to provide crypto services.
This includes “any form of advertisements or promotional materials in public areas such as Singapore public transport, public transport venues, broadcast media or periodical publications, third party websites, social media platforms, public events or roadshows.”
Hiring or paying third parties such as social media influencers or websites to promote their services or crypto trading, in general, are also out.
Which leaves the exchanges and service providers’ own websites and mobile apps, and their own official social media channels.
In other words, sing only to the choir.
Permission Required
On the same day, Spain’s National Securities Market Commission, the CNMV, released a circular on advertising crypto investments.
It required “clear, balanced, fair and non-misleading content and information on the risks in a prominent manner,” in all crypto ads as well as a warning: “Investments in crypto-assets are not regulated. They may not be appropriate for retail investors and the full amount invested may be lost.”
The rules specifically exclude non-fungible token (NFT) ads.
Beyond that, it establishes a procedure requiring any crypto ad campaign targeting a mass audience of 100,000 or more people to get pre-approval for ads. This includes the advertisers themselves, ad service providers and “to any other natural or legal persons who carry on such activity on their own initiative or on behalf of third parties.”
This specifically includes anyone paid to promote crypto assets, notably social media and other influencers.
In addition, any link in such ads must include language such as, “It is important to read and understand the risks of this investment, which are explained in detail at this link.”
The CNMV noted that no new crypto asset regulations had been established, and carved out a number of exemptions for cryptocurrencies and products “not used for investment purposes.”
Along with NFTs, this includes some “utility tokens” — used to run a blockchain project rather than being offered as an investment — white papers, some analysts and workshop presentations, “and corporate advertising campaigns when they comply with certain requirements.”
Nor does it apply cryptocurrencies that “have the nature of financial instruments” as they are already subject to a separate set of rules.
UK Crackdown
The U.K.’s Advertising Standards Authority (ASA) has been on a crypto ad crackdown lately, with the most recent target being ads by Crypto.com — an exchange based, ironically enough, in Singapore.
It banned two ads as “misleading.”
One involved an ad in the Daily Mail newspaper’s app that said, “Buy Bitcoin with credit card instantly.” The other was in the Love Balls mobile game, offering interest rates of “up to 8.5%” by staking crypto.
Both were found to be “irresponsible and took advantage of consumers’ inexperience or credulity,” and the second’s interest rate claims “could not be substantiated,” the ASA found.
“We told them that future ads must make clear that the purchase of cryptocurrency using a credit card could be subject to higher interest rates, extra fees and that some credit card issuers prohibit the buying of cryptocurrency,” the ad agency said in a release.
Other recent ad bans included one for the Arsenal soccer club’s fan token on Dec. 22, and ads for the Coinbase and Kraken exchanges on Jan. 5.
And, of course, here in the U.S., we have U.S. Sen. Elizabeth Warren (D-Mass.) leading the charge for stronger investor protections. And on Dec. 21, Facebook finally got around to loosening its long-standing near-ban on crypto ads, increasing the number of regulatory licenses it considers acceptable to be approved to run advertising from three to 27. That was two and a half years after announcing plans for its own cryptocurrency, the Libra — now Diem — stablecoin.
Read more: Sen. Warren Calls DeFi the ‘Most Dangerous’ Part of Crypto at Senate Hearing