South Africa’s Advertising Regulatory Board (ARB) has added a clause to its Code of Advertising Practice to deal with crypto assets.
In terms of the new clause 17, promotional material must “expressly and clearly” state that investing in crypto assets could result in a loss of capital.
Advertisements for a particular crypto asset service or product must also be easily understandable and give a balanced message about projected returns, features, benefits and risks.
The ARB said the new rules are aimed at protecting consumers from being misled by unethical advertisers and are the result of consultation and agreement with the crypto industry.
The rules state that any historical period or past performance “should not be presented in such a way that it creates a favourable impression of the advertised product or service”.
Advertising that mentions rates of return, projections and forecasts must be supported by “adequate substantiation” as to how these are calculated.
In addition: “Advertisements by crypto asset service providers who are not registered credit providers should not encourage the purchase of crypto assets on credit. This does not preclude advertisements providing information about the payment methods offered by crypto asset service providers.”
If social media influencers or other ambassadors are used to promote a crypto asset service or product, they must disclose payment or freebies and steer clear of deception, as in any advertising under the ARB’s general rules.
They are also specifically required, when it comes to crypto tokens, to “share factual information only”. They may not offer advice on trading or investing in crypto assets or make promises about the benefits or returns from investing.
‘Eyes wide open’
Gail Schimmel, the chief executive of the ARB, said the creation of the new rules was “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. This has been an exciting project, and we know that it will result in better protection for vulnerable consumers.”
Marius Reitz, general manager for Africa at Luno, who has spear-headed the project, said: “Rules around ethical advertising are non-negotiable for us as an industry. 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 [are] realistic.”
The ARB was established by the marketing and communications sector to protect consumers through the self-regulation of advertising. Membership of the ARB is voluntary, and advertisers can choose not to be bound by its rules. However, the body has the power to direct its members to not accept specific ads, to close off distribution even if an advertiser will not comply with its ruling.
Click here to download Section III of the code, which includes clause 17 (the rules governing crypto assets).
