Advertisement

Belgian FSMA surveys crypto investors before taking on new ad regulation authority

Crypto ads in Belgium will bear a blunt warning after a new regulation takes effect in May, and “mass” advertising campaigns will be subject to advance FSMA approval.

The Belgian Financial Services and Markets Authority (FSMA) will have new powers to supervise digital currency advertising when a new regulation comes into force on May 17. In preparation for its new role, the agency commissioned a survey of investors.

The new regulation will have three aspects. First, it will require accuracy and clear language, with no statements on future returns of value. Second, there will be a mandatory warning on all advertising:

“Virtual currencies, real risks. The only guarantee in crypto is risk.”

In addition, a “broader warning should sum up the various risks in greater detail.”

Finally, campaigns with a target audience of 25,000 or more (mass campaigns) will have to be submitted to the FSMA at least 10 days in advance “to enable the FSMA to intervene, if necessary, before the campaign actually begins.”

The FSMA will also boost educational efforts through its Wikifin financial education center. In preparation for its new role, the FSMA commissioned a survey of 1,000 Belgian investors in November 2022 who placed money in investment products beyond savings, term deposit and pension accounts.

Related: Belgium says BTC, ETH and other decentralized coins are not securities

Over a third (34%) of investors surveyed in the age group 16–29 bought digital currencies, with the proportion falling to 11% for the 50–59 age group. Men make up 80% of the buyers. Investors were concentrated in Flanders (63%), with only 22% living in Wallonia and 15% in Brussels.

Crypto investments tended to be smaller than traditional ones, with only 15% of investors holding more than 10,000 euros worth of crypto and 31% holding less than 500 euros worth. Crypto investors were more dependent on the advice of friends, family, apps and “robo-advice” than traditional investors.

The FSMA began regulating cryptocurrency exchanges in May 2022. The United Kingdom also recently imposed tightened requirements for crypto advertising.

Crypto ads and sponsors banned from women’s cricket league in India

Following men’s cricket, the Board of Control for Cricket in India (BCCI) prohibits women’s teams from having commercial associations with crypto businesses.

Indian authorities once again demonstrated their tough stance on cryptocurrencies with a preemptive ban on crypto advertising and sponsorships in the local women’s cricket league. 

As reported by Planet Sport on Feb. 14, the Board of Control for Cricket in India (BCCI) sent a 68-page advisory to the Women’s Premier League teams, specifying the activities which couldn’t be advertised. In the document, cryptocurrencies were mentioned along with the gambling and tobacco industries:

“No franchisee shall undertake a partnership or any kind of association with an entity that is in any way connected/related to an entity that is involved/operates, directly or indirectly, in the cryptocurrency sector.“

This follows a previous ban for the men’s cricket Premier League, introduced back in 2022. Before the ban, the Indian Premier League had collaborated at least with two local crypto exchanges — CoinSwitch Kuber and CoinDCX. Coincidentally, in March 2022, the crypto businesses decided not to advertise in the Premier League due to responsibility concerns.

Home to an estimated 115 million cryptocurrency investors, in 2022, India introduced two laws demanding crippling taxes on crypto-related unrealized gains and transactions and requiring its citizens to pay a 30% tax on unrealized crypto gains.

Related: India in ‘no hurry’ for CBDC as digital rupee pilot onboards 50K users

Some investors expected a change this year to ease the pressure on the crypto sector, but the national budget for 2023 didn’t deliver. The country’s finance minister, Nirmala Sitharaman, believes in a global regulatory framework on crypto, which is why the Indian crypto regulatory regime is unlikely to shift autonomously.

Crypto advertising became a hot topic for global regulators and enforcement agencies amid a series of failures and bankruptcies of large platforms. In the United Kingdom, newly proposed advertising rules could potentially see executives of crypto firms face up to two years of prison for failing to meet certain requirements around promotion.

YouTuber baits MMA fighter into secretly shilling fake NFTs for $1K

Coffeezilla, a YouTuber and crypto investigator, revealed that American mixed martial artist Dillon Danis promoted a fake NFT project without disclosing that he received $1,000 for the advertisement.

While the support from numerous A-list celebrities expedited the nonfungible token (NFT) boom of 2021 and 2022, some promoted unvetted projects to fans without knowing if they were legitimate or scams. The practice retains its popularity in 2023 as markets recover.

In the promotion, Danis tweeted out a digital image with a website URL, which, according to Coffeezilla, “literally spells out S.C.A.M.” A further investigation from Cointelegraph shows that the website was newly created on Feb. 1, 2023 — an important clue to check when checking the credibility of new projects.

Moreover, the website FAQ mentions that no investors can get hold of the “Sourz” NFTs, a crucial piece of information overlooked by the MMA fighter.

SourzNFT FAQ highlighting that no users can get the NFTs. Source: sourznft.com (CoffeeZilla)

A similar incident involving Kim Kardashian was flagged in June 2021 by the United States Securities and Exchange Commission (SEC) when she promoted EthereumMax (EMAX) crypto token to her 330 million Instagram followers. According to the SEC, Kardashian violated the anti-touting provision of the Securities Act by failing to disclose the $250,000 she had received for the promotion.

However, Coffeezilla ensured that the users who fell for the scam NFT project were notified immediately. When users click the “Mint Sourz” button (as shown in the above screenshot), they are redirected to a website that cautions against a possible scam.

A webpage showcasing crypto projects previously promoted by MMA fighter Dillon Danis. Source: sourznft.com (CoffeeZilla)

While Coffeezilla plans to share more information through a follow-up video, the incident is a strong reminder for influencers and investors to do their own research before promoting or investing in a project.

Related: FBI seizes $100K in NFTs from scammer following ZachXBT investigation

Little Shapes NFT, a project launched in Nov. 2021, was a “social experiment” designed to shed light on large-scale NFT bot network scams on Twitter, according to pseudonymous founder Atto.

“I needed a story that sells to make sure no one would ignore a story that hurts,” explained Atto when explaining his intent behind launching the NFT project.

Little Shapes was marketed as an upcoming avatar-style project with 4,444 NFTs that would allow owners to interact and change the artwork in real time.

FTX meltdown triggers FINRA into probing crypto comms

The examination comes in the wake of the FTX debacle, a crypto exchange found to be mismanaging customers’ funds by simply lying about their operations.

The Financial Industry Regulatory Authority (FINRA), the American self-regulatory organization, has launched an examination into the firm’s retail communications concerning crypto products and services offered by them.

The regulatory body, in an official notice, announced that it is launching a targeted exam on firms on how they handled retail communications between July 1 and the end of September. The decision to examine crypto-related retail communications comes in the wake of the collapse of the FTX crypto exchange.

Any written (including electronic) message that is issued or made available to more than 25 retail investors within any 30-day period is referred to as a “retail communication” according to FINRA. It also applies to video, social media, mobile apps and websites in addition to writing communications.

In its exam notice, FINRA asked firms to provide additional information for each individual communication, such as the date it was first made public, whether it was filed with FINRA’s advertising regulation department, whether a principal at the firm approved the communication and identifying the crypto assets or services mentioned in the communication.

In addition to any relevant compliance rules or materials, FINRA has requested that firms submit written supervisory procedures for the “examination, approval, record-keeping and dissemination” of the communications. It also requested information on any contracts made with affiliates on the production or distribution of the messages, as well as any knowledge such affiliates might have regarding the target audience.

The probe began on Nov. 14 with an aim to investigate whether any of the retail crypto products or services were falsely advertised. At the peak of the crypto bull run, crypto advertisements became the flavor of many brands and celebrities. Crypto ads ruled the Super Bowl 2022 as well, with FTX being one of the most talked about ads at the time.

Related: Thailand SEC to apply strict guidelines for crypto ads

The flood of advertisements became a big concern for regulators given the majority of these advertisements didn’t adhere to any advertisement standards and often hid the risks associated with crypto investments while glorifying the high returns.

Many celebrities like Tom Brady, Larry David and Steph Curry, who were brand ambassadors for the FTX crypto exchange, are facing a class-action lawsuit. The lawsuit alleged that celebrities advertised FTX’s fraudulent scheme that was designed to take advantage of unsophisticated investors from across the country.

At the start of the year, authorities in the United Kingdom, Singapore and Spain tightened the requirements around crypto firms’ marketing messaging and customer recruitment practices. Many other countries and global brands have also imposed restrictions on crypto advertisements amid market turmoil.

Amendment to UK financial services bill provides regulation for crypto activities

The bill addressed stablecoin regulation from the start. Now, the Financial Conduct Authority will be empowered to regulate activities with crypto assets if the amended bill passes.

An amendment to the Financial Services and Markets Bill now before the United Kingdom’s parliament would extend the law’s powers to regulate financial promotion and other activities to crypto assets. The amendment was written by Member of Parliament and Financial Secretary to the Treasury Andrew Griffith. 

The 335-page bill was introduced in July and had its second reading in the House of Commons on Sept. 7. According to the explanatory statement accompanying the amendment, it would:

“[…] clarify that the powers relating to financial promotion and regulated activities can be relied on to regulate cryptoassets and activities relating to cryptoassets.”

The Financial Conduct Authority (FCA), the U.K.’s financial regulator, published a “Dear Chief Executive” letter on Aug. 9, which detailed its supervisory strategy over financial firms’ so-called “alternatives portfolio.” The letter stated: “We will publish final rules for the promotion of crypto assets once the Treasury formalises legislation to bring these into our remit.”

Related: FCA green lights Revolut, making no UK crypto firms operating under temporary status

Most crypto-related businesses in the U.K. are not under the control of the FCA now, though they have the option of applying for registration and will be required to do so next year. The registration process currently looks only at Anti-Money Laundering and Countering the Financing of Terrorism measures and has proven challenging for many applicants.

The FCA also took action on the advertising of high-risk financial products in August and explicitly stated that crypto assets can be risky, but the agency was not yet regulating them. The country’s Advertising Standards Authority has been more aggressive in monitoring crypto-related advertising.

Griffith’s predecessor as financial secretary Richard Fuller stated in September that the government was committed to making the U.K. a “hub for crypto technologies.” On Oct. 10, the European Parliament Committee on Economic and Monetary Affairs passed the Markets in Crypto-Assets bill and a full parliamentary vote is expected soon.

Netflix bans crypto commercials on ad-based streaming service: Report

Desperate to boost revenues, Netflix announced in July that it would be launching a cheaper subscription tier that features commercials.

Streaming giant Netflix has reportedly banned cryptocurrency-related commercials on its ad-supported subscription tier, which is scheduled to launch in November months ahead of schedule. 

Citing local sources, The Sydney Morning Herald reported Monday that Netflix has decided to reject all advertising campaigns related to politics, gambling and cryptocurrency on its new subscription tier. The new tier will also not run ads selling products to children. The same sources indicated that restrictions on pharmaceutical ads were also being considered.

According to Variety, Netflix has moved up the timeline for launching its cheaper ad-supported tier to November to compete with Disney+, which is launching its own ad-based plan on Dec. 8. Initially, Netflix was planning to launch its ad-supported tier at the start of 2023.

Netflix’s new subscription tier will go live on Nov. 1 in several countries, including the United States, Canada, United Kingdom, Germany and France, Variety said.

Related: Netflix‘s crypto swindler documentary draws wild community reaction

With global subscribers declining in consecutive quarters, Netflix announced in July it would launch a new ad-supported service to boost revenues. In the second quarter, the streaming giant lost 970,000 paid subscribers after losing 200,000 in the first three months of 2022. Faced with slowing revenue growth, Netflix disclosed in June it would cut costs to keep its margins at 20%.

Due to regulatory scrutiny, crypto bans are nothing new for the digital asset industry. In 2018, social media giant Meta (formerly Facebook) banned crypto ads across its platform before reinstating them later in the year. In 2021, Google-parent Alphabet reversed a ban on crypto-related advertisements, allowing exchanges and wallet operators to again promote their services on the search engine.

Dubai issues crypto marketing rules to better protect investors

Dubai’s new Virtual Asset Regulatory Authority requires more clarity and transparency from industry marketers and promoters to protect investors.

Amid Dubai moving forward with a new license program for cryptocurrency service providers, local regulators are introducing additional marketing and advertising rules for the industry.

Dubai’s Virtual Asset Regulatory Authority (VARA), the city’s dedicated crypto regulator, reportedly announced new regulatory guidelines on the marketing, advertising and promotions of virtual assets on Thursday.

In the rules, the VARA referred to all forms of outreach, communications and advertising, dissemination of information, building awareness, customer engagement, investor solicitation and others, the local news agency Gulf News reported.

The guidelines cover all virtual asset-related communications and entities publishing information on Dubai-based media websites, search platforms as well as online and offline publishing channels that target customers within the Dubai market.

The rules reportedly also require all local virtual asset service providers (VASPs), including advertising platforms, to ensure factual accuracy and openly demonstrate any promotional intent to avoid misleading potential customers.

The VARA reportedly noted that the new guidelines relate to Dubai’s crypto-focused Minimal Viable Product (MVP) license, stating:

“These regulations specifically address marketing and communications activities, ahead of operationalizing the MVP licensees so that any mass-market information dissemination, and consumer solicitation are designed to safeguard community interests.”

As previously reported, Sam Bankman-Fried’s FTX crypto exchange was one of the first companies to receive VARA’s MVP license through its local subsidiary FZE in July 2022. The license enabled FZE to operate a VASP in the region.

Related: Singapore MAS examines crypto firms ahead of new regulations: Report

VARA’s guidelines came along with Abu Dhabi’s new plans to launch a strategy for blockchain and virtual assets aligned with the country’s overall economic strategy. On Thursday, the Abu Dhabi Blockchain and Virtual Assets Committee held its first meeting to discuss the strategy.

Established in March 2022, Dubai’s VARA is responsible for licensing and regulating all VASPs in the Emirate’s special development and free zones with the exception of the Dubai International Financial Centre. The regulator is known for its ambitious industry regulation plans, purchasing land in the virtual reality world The Sandbox in May.