Facebook has issued a new policy prohibiting advertisements for initial coin offerings (ICOs) and cryptocurrencies. The move is designed to protect users against deceptive or misleading promotional practices associated with a host of financial products and services, ultimately protecting users against fraud.
Last year’s rush to invest in cryptocurrencies left many feeling like there was no time to study up before diving in, and bad actors were ready to take advantage of people’s ignorance of the risks inherent in the volatile crypto ecosystem. A flock of scam coins like Bitconnect were gobbled up by opportunistic investors, driven in part by advertisements on social media platforms. Some people were luckier and lost very little, while others lost a whole lot more.
In a blog post, Facebook Product Management Director Rob Leathern explains that the policy to ban all ads about ICOs and cryptocurrencies is “intentionally broad while we work to better detect deceptive and misleading advertising practices, and enforcement will begin to ramp up across our platforms including Facebook, Audience Network, and Instagram.” Meanwhile, the founders of Ethereum and Ripple have been warning users about the possibility of falling victim to scams, and veterans of cryptocurrency development and trading have been reminding people of the conventional wisdom: never invest more than you can afford to lose.
All of this closely follows announcements from the U.S. Securities and Exchange Commission (SEC) that cryptocurrencies will fall under greater scrutiny than they did in the past. In particular, the lack of regulation keeps cryptocurrencies in legal gray areas that make them excellent tools for people acting in bad faith. Regulatory bodies around the world want to change that. Decentralization and anonymity are attractive features of any blockchain-based asset, but it’s important to keep them beholden to the best interests of their investors. Cryptocurrencies promise a “trustless” economy, but they will be worthless if they are not trustworthy themselves.
Time will tell whether other companies follow Facebook’s lead. Policies like theirs will help to protect consumers, and will also shore up faith in an industry that has a steep learning curve. Ads may return when that happens, but until then, a ban helps everyone say good riddance to bad rubbish.
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