The South African Advertising Standards Authority (ARB) has introduced new rules for advertising cryptocurrencies to protect investors from false and misleading information.
According to the guidelines introduced by the agency into the state’s advertising code, cryptocurrency companies are required to warn people about the risks associated with investing in digital assets when promoting their services. Marketing materials should make it clear that investors can lose their investment due to market volatility, since the price of cryptocurrencies is volatile: it can rise and suddenly collapse. The general message of advertising cryptocurrency products or services should not contradict warnings about possible monetary losses.
An equally important requirement of the ARB is that exaggerated or misleading statements cannot be used in advertising of crypto companies. We are talking about promises of high returns or low risks without providing evidence to support these statements. In addition, companies are required to fully disclose fees, charges, and restrictions associated with their products and services.
Advertising must clearly state that past positive results from trading or investing in crypto assets do not guarantee future profits. ARB noted that similar requirements apply to standard financial services, as any advertisement for financial products must be fully disclosed.
The regulator added that influencers and representatives of cryptocurrency companies can only disseminate information about them if they comply with the requirements of regulatory authorities. If influencers are not considered qualified investors by the regulator’s criteria, these individuals may only share factual information about a cryptocurrency product, without providing further guidance on crypto asset trading or investment.
Recall that in October, the Financial Sector Supervision Authority of South Africa (FSCA) introduced amendments to the legislation equating digital assets with financial products. Earlier, the South African Reserve Bank (SARB) urged banks not to refuse to serve Virtual Asset Service Providers (VASPs).
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