South Africa’s Advertising Regulatory Board (ARB) has included a new clause for the cryptocurrency industry aimed at protecting consumers from unethical advertising.
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Companies and individuals in South Africa must abide by certain advertising standards pertaining to the provision of cryptocurrency products and services in a new clause introduced to Section III of the country’s advertising code.
The first clause requires that adverts, including cryptocurrency offerings, must ‘expressly and clearly’ state that investments may result in the loss of capital ‘as the value is variable and can go up as well as down.’ Furthermore, adverts must not contradict warnings about potential investment losses.
Advertising for particular services and products must be explained in an ‘easily understandable’ manner for intended audiences. Adverts must also give balanced messages around returns, features, benefits and risks associated with the associated product or service.
Rates of returns, projections or forecasts must also be adequately substantiated, including how these are calculated and what conditions apply to touted returns. Any information relating to past performance cannot be used to promise future performance or returns, and should not be presented in a way that creates ‘a favourable impression of the advertised product or service.’
Adverts from cryptocurrency service providers that are not registered credit providers should not encourage the acquisition of cryptocurrencies using credit. However this does not preclude the advertising of associated payment methods provided by service providers.
Social media influencers and brand ambassadors will also be expected to comply with certain advertising standards. This includes being required to share factual information while being prohibited from offering advice on trading or investing in crypto assets and the prohibition of promises of benefits or returns.
Also Read: South African Hacker Group Stole Millions In Funds From Cloud Platforms To Run Crypto Mining Venture.
Cryptocurrency exchange Luno, a prominent service provider in South Africa, spearheaded the project with the ARB. Luno’s GM for Africa Marius Reitz told Cointelegraph the exchange approached the regulatory body to develop new rules alongside major players in the local crypto industry.
Cryptocurrency investors globally have fallen prey to some major scams in recent years. In South Africa, Mirror Trading International grabbed headlines through 2020 and 2021 as its CEO Johan Steynberg fled the country with sole control of wallets containing around 23,000 Bitcoin
BTC, belonging to thousands of investors.
Africrypt was another South African investment scheme that turned sour on investors in 2021, with brothers Raees and Ameer Cajee claiming that a hacking incident had led to the loss of some $200 million worth of cryptocurrencies being managed by the fund.
