A new provision for dealing with crypto products has been added to the Code of Advertising Practice by the Advertising Regulatory Board (ARB).
The new regulations, which were developed after consultation and agreement with the cryptocurrency industry, are aimed at preventing customers from being duped by dishonest advertisements.
“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 government,” says Gail Schimmel, CEO of the ARB. “This has been an exciting project and we know that it will result in better protection for vulnerable consumers.”
“Rules around ethical advertising are non-negotiable for us as an industry,” says Marius Reitz, GM for Africa at Luno, who has spearheaded the project. “We don’t want rogue advertisers making claims that mislead vulnerable consumers about the reality of crypto investment. It is important to us that consumers enter this exciting market with their eyes open and their expectations realistic.”
The new clause is Section III Clause 17, and the complete text (rephrased for clarity) is as follows:
17.1 Advertisements must openly and unequivocally declare that purchasing cryptocurrency assets has the risk of capital loss because their value is erratic and subject to both ups and downs. The language used should have, or should convey, the same meaning as the example below: Investing in cryptocurrencies carries the risk of losing money.
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17.2 Advertisements must comply with Clauses 2 and 4.2.1 of Section II In particular:
17.2.1. The overall message of the advertisement must not contradict the warning statements set out in Clause 17.1 above.
17.2.2. An advertisement for a certain crypto asset service or product must clearly describe the applicable product or service to the intended target audience.
17.2.3 Advertisements must give a balanced message about the returns, features, benefits and risks associated with the product or service.
17.2.4 Rates of return, estimates, and forecasts must be backed up by sufficient documentation that meets with Section II’s Clause 4.1 standards. Any rate of return, estimate, or forecast must be disclosed, together with any key assumptions that were used in its calculation.
17.2.5 Past performance data must explicitly state that past results are not necessarily indicative of future results. Any historical period or past performance shouldn’t be presented in a way that makes the marketed good or service look good.
17.3. Advertisements from companies selling crypto assets but not authorised credit providers shouldn’t promote buying crypto assets on credit. This does not prevent marketing from mentioning the payment options that crypto asset service providers offer.
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17.4.The standards in Appendix K must be followed when influencers or ambassadors are used to market a crypto asset product or service. The ambassador or influencer may only offer factual information, in particular. Influencers and ambassadors are not permitted to make advantages or return promises or to give advice on buying, selling, or investing in crypto assets.
Crypto Advertising Code South Africa Crypto Advertising Code South Africa
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard