The Advertising Regulatory Board (ARB) is moving to protect consumers by adding a new clause to the Code of Advertising Practice that deals with cryptocurrency products.
“The new rules are aimed at protecting consumers from being misled by unethical advertisers and are the result of consultation and agreement with the cryptocurrency industry,” the ARB said in a statement on Monday.
“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,” said ARB CEO Gail Schimmel.
Luno, the Cape Town-based crypto exchange, helped spearhead the project. Its GM for Africa, Marius Reitz, 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.”
The updated Code of Advertising Practice states that:
- Advertisements must expressly and clearly state that investing in crypto assets may result in the loss of capital as the value is variable and can go up as well as down. The wording should be, or should communicate the same, as the following example: “Investing in crypto assets may result in the loss of capital.”
- The overall message of the advertisement must not contradict the warning statement above.
- An ad for a particular crypto asset service or product must explain the relevant product or service in a way that is easily understandable for the intended target audience.
- Ads must give a balanced message about the returns, features, benefits and risks associated with the product or service.
- Rates of return, projections and forecasts must be supported by adequate substantiation. It must be communicated how any rate of return, projection or forecast is calculated and what significant conditions apply.
- Information presented about past performance must make it clear that the past performance is not indicative of future performance. 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.
- Ads by crypto asset service providers that are not registered credit providers should not encourage the purchase of crypto assets on credit. This does not prevent ads from providing information about the payment methods offered by crypto asset service providers.
- Where influencers or ambassadors are used to promote a crypto asset product or service, they may share factual information only. Influencers and ambassadors may not offer advice on trading or investing in crypto assets and may not promise benefits or returns.
The Advertising Regulatory Board was set up by the marketing and communications industry to protect the South African consumer through the self-regulation of advertising. The founding members of the ARB are the Marketing Association of South Africa, the Association for Communication and Advertising and the Internet Advertising Bureau (IAB). – © 2023 NewsCentral Media