The Advertising Regulatory Board (ARB) is taking action to protect consumers by adding a new clause to the Code of Advertising Practices that addresses cryptocurrency products.
“The new rules are intended to protect consumers from being misled by unethical advertisers and are the result of consultation and agreement with the cryptocurrency industry,” it said on Monday. ARB in a press release.
“This is a wonderful example of an industry that sees the harm that could be done in its name and is committed to self-regulating issues without being forced into it by government,” said Gail Schimmel, CEO of ARB.
Luno, the Cape Town-based crypto exchange, helped spearhead the project. Its managing director for Africa, Marius Reitz, said: “Ethical advertising rules are non-negotiable for us as an industry. We don’t want dishonest advertisers making claims that mislead vulnerable consumers about the reality of investing in crypto.
The updated Code of Advertising Practices states that:
- Advertisements should expressly and clearly state that investing in crypto assets may result in a 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 a loss of capital.”
- The general message of the advertisement must not contradict the disclaimer above.
- An advertisement for a particular crypto asset service or product should explain the particular product or service in a way that is easily understandable to the intended target audience.
- Ads should give a balanced message about the returns, features, benefits, and risks associated with the product or service.
- Rates of return, projections and forecasts should be supported by adequate justification. It should be disclosed how any rate of return, projection or forecast is calculated and what material terms apply.
- Disclosures of past performance should make it clear that past performance is not indicative of future performance. Any historical period or past performance should not be presented in such a way as to create a favorable impression of the advertised product or service.
- Advertisements from crypto-asset service providers that are not registered credit providers must not encourage the purchase of crypto-assets on credit. This does not preclude advertisements from providing information about payment methods offered by crypto-asset service providers.
- When influencers or ambassadors are used to promote a crypto-asset product or service, they may only share factual information. Influencers and Ambassadors cannot offer advice on trading or investing in crypto assets and cannot promise benefits or returns.
The Advertising Regulatory Board was established 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