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South Africa announced specific rules for crypto advertising to protect investors as advertisers are invited to disclose the risks associated with cryptography.
At the height of bull markets, crypto vendors promoted their offerings. They have used a variety of vehicles to promote their product, such as sponsorship of sporting events and brand support for well-known celebrities and social media influencers.
The Advertising Regulatory Board (ARB) of South Africa has now added a new crypto-related clause to the Code of Advertising Practice to offer greater protection to investors, according to TechCentral
South Africa Crafts Rules for Crypto Advertisements
The new rules are designed to increase consumer awareness by preventing misleading information in advertising. Cryptographic advertising should also warn consumers of asset price movements and capital losses.
The updated advertising code of practice also stipulates that advertising explains the product offered in a manner that is "easily understood by the target audience". with decisive influence, He emphasized that influencers should only be able to share factual information, and should not "provide advice" about trade or investment.
It should also be noted that luno, a crypto exchange based in Cape Town, assisted the arb in preparing the new rules. Marius reitz, Chief Executive Officer of luno africa, said: Ethical advertising rules are not negotiable for us as an industry. We do not want dishonest advertisers to misrepresent the reality of crypto investment to vulnerable consumers."
Combating deceptive advertising.
Celebrities and social media influencers are under the tight scrutiny of regulators, especially after the FTX collapse last Nov. The Finance Ministry of the U.K. is concerned about misleading crypto advertisements and will soon bring regulations to protect consumers.
Rishi sunak, the Prime Minister of the United Kingdom, said, "Cryptoassets can offer exciting new possibilities. It is important that consumers not be sold with deceptive ads."
In Dec., the US Securities and Exchange Commission (SEC) targeted social media influencers for $100 million in securities fraud. Sec argued that social media influencers have been claiming to be successful traders since January. 2020 and used their sequel on Twitter and divisiveness to manipulate market prices.
Legal duties of social media influencers.
Celebrities who previously promoted FTX are now confronted with legal problems. An Oklahoma resident filed a class-action lawsuit against celebrities associated with FTX, including Tom Brady, Stephen Curry, and the Shark Tank personality Kevin O’Leary. The prosecution charges these influential individuals with promoting unregistered securities and claims $11 billion in damages.
In addition, the Texas State Securities Board is investigating whether the promotion of FTX by celebrities violated the state securities laws.
Vitalik Buterin, the co-founder of Ethereum, has shared his thoughts on whether the influencers should be held legally responsible for promoting projects. He believes it is counterproductive because influencers who are unlikely to take risks are more likely to keep their mouths shut. However, it states that influencers should be required to report paid promotions.
Ensuring that influencers are legally responsible in the broad sense has the potential to be counterproductive, because this would make people less inclined to take risks (which could be the best to distinguish authentic good things from junk) more likely to keep their mouths shut.
Requiring disclosures for paid promotion is reasonable.
— vitalik.eth (@VitalikButerin) November 19, 2022
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