Crypto asset providers that seek to attract potential investors through advertisements are now facing increased scrutiny and stricter requirements from South Africa’s advertising regulator. These include a warning on the potential loss of capital while influencers are not allowed to offer advice on crypto trading or investing and are also barred from making promises of benefits and returns.
South Africa’s Advertising Regulatory Board (ARB) recently released its latest code of practice that states crypto-related adverts need to clearly warn the public that investing in digital assets “may result in the loss of capital,” Bitcoin.com reported. The overall wording of these crypto ads should not contradict this warning, the code emphasized.
South African crypto exchange and the ARB collaborated to come up with the new crypto asset advertising guidelines. The new code is likely aimed at making it harder for scammers to use regulated media platforms to target their victims.
“This is a wonderful example of an industry that sees the harm that could be done in its name and steps up to self-regulate the issues without being forced to do so by [the] government. This has been an exciting project and we know that it will result in better protection for vulnerable consumers,” ARB CEO Gail Schimmel commented on the inclusion of crypto in the new advertising code.
Aside from mandating the addition of the capital loss warning, ads must use language that is easily understood by their targeted audience, according to the AR. The new code also requires advertisements that promise future earnings or gains must back these claims with “adequate substantiation that complies with the requirements of Clause 4.1 of Section II.”
In addition, adverts that refer to past performances should not present the fact in such a way that they leave a “favorable impression of the advertised product or service.”
Influencers may still be hired to convince potential investors but the new code stipulates that he or she must “share factual information only.” Project ambassadors and influencers are also not allowed to offer “advice on trading or investing in crypto assets and may not promise benefits or returns.”