A growing number of internet companies are banning cryptocurrency advertising, fearing reputational damage if their users are duped or left penniless, even as regulators struggle to get to grips with the fast-emerging industry.
Twitter on Tuesday began blocking crypto ads, becoming the latest internet giant to crack down after moves by Alphabet’s Google and Facebook earlier this year.
Once restricted to small online chatrooms for early bitcoin backers, cryptocurrencies have since exploded in popularity and the industry has grown rapidly.
Huge billboards promoting the latest coin hang over Tokyo’s streets, ads touting crypto-trading dot the London underground network, and social media platforms are full of start-ups looking to raise capital through “initial coin offerings” (ICOs), as the selling of new virtual tokens is known.
While regulators have stepped up their warnings about the risks to consumers of investing in cryptocurrencies and the potential for scams, in most jurisdictions they are only beginning to discuss publicly how they might regulate the industry, let alone frame advertising rules.
Last week, the G20 group of nations failed to agree on specific regulatory action.
So companies are taking matters into their own hands.
“If internet companies were not already under pressure from regulators for their loose control of data privacy, they probably would not ban advertising from cryptos, which are still a grey area for many regulators,” said Arnaud Masset, a crypto-currency analyst at Swissquote Bank.
Snapchat in February started removing adverts for ICOs – which regulators say lack transparency and are susceptible to fraud – a spokesperson told Reuters.
The company declined to comment on whether it would widen the ban to include individual cryptocurrencies, crypto-wallets and unregistered exchanges, as other technology giants have done.
LinkedIn is blocking crypto-related ads, a spokesman said, although owner Microsoft does allow adverts on its other platforms.
AROUND THE WORLD
Across Asia, where the crypto frenzy is at its most feverish, firms are also restricting advertising.
China outlawed cryptocurrency exchanges and ICOs last year. Chinese internet titans Baidu, Tencent, and Weibo followed suit by curbing ads shortly after.
While Japan’s government and regulators have embraced cryptocurrencies as a phenomenon that is here to stay, sentiment was hit by a US$530 million cyber heist of an exchange in January.
Prime time TV advertising subsequently fell, billboards on Tokyo’s transport network were cut back and online companies are responding with changes to their advertising policies.
Line, Japan’s most popular social media site and messaging app, does not allow crypto-related advertising. The policy is designed to protect customers and avoid legal risks, it says.