Crypto Updates

South Africa Mandates Risk Warnings in Crypto Ads

South Africa

South Africa’s Advertising Regulatory Board (ARB) issued new guidelines mandating a risk warning for all cryptocurrency investment advertisements. “Investing in Crypto assets may result in the loss of capital,” all crypto ads in the country need to show the exact message or something similar.

ARB, a self-regulatory initiative by the ad and public relations industry, further specified that the advertisements must explain the products and services in an “easily understandable” manner. Also, they need to give a balanced message around “returns, features, benefits, and risks associated with the product or service.”

“Rates of return, projections, and forecasts must be supported by adequate substantiation,” the updated Code of Advertising Practice stated. “It must be communicated how any rate of return, projection, or forecast is calculated and what significant conditions apply.”

Additionally, the advertisers need to clarify the performance information making it clear that the past performance of the cryptocurrency is not an indication of future performance. “Any historical period or past performance should not be presented in such a way that it creates a favorable impression of the advertised product or service,” the guidelines added.

Check out the latest FMLS22 session on “Digital Assets’ Marketing Under A Magnifying Glass.”

Crack Down on Crypto Influencers

The South African regulator is also moving against the crypto influencers by compiling specific requirements for such endorsements.

“The influencer or ambassador 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 guidelines stated.

Many crypto companies have signed endorsement deals with heavy-weight celebrities, from Kim Kardashian to Tom Brady, for promotions. However, many such platforms turned out to be outright frauds.

Earlier, the US Securities and Exchange Commission (SEC) fined famous boxer Floyd Mayweather and rapper DJ Khalid for endorsing the $25 million fraudulent initial coin offering (ICO) of Centra Tech. Last October, Kim Kardashian settled with the US regulator, paying $1.26 million for promoting EthereumMax.

Tom Brady and Gisele Bundchen endorsing now-collapsed crypto exchange, FTX.

The Regulatory Backlash against Crypto Ads

Meanwhile, the South African regulator is not the first to come up with specific crypto advertisement…

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