South African regulator introduced requirements for advertising cryptocurrencies

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Advertising Standards Authority of South Africa (ARB) introduced new rules for cryptocurrency advertising to protect investors from false and misleading information.

According to the guidelines introducedDepartment in the state advertising code, cryptocurrency companies are obliged, when promoting their services, to warn people about the risks associated with investing in digital assets. Marketing materials should clearly state that investors may lose their investment due to market volatility as cryptocurrency prices are volatile and can rise and crash suddenly. The general message of advertising of cryptocurrency products or services should not contradict warnings about possible monetary losses.

An equally important requirement of the ARB isthat exaggerated or misleading statements should not be used in advertising of crypto companies. These are promises of high returns or low risks without providing evidence to back up these claims. In addition, companies are required to fully disclose the fees, charges, and restrictions associated with their products and services.

The advertisement must clearly state thatPast positive results from trading or investing in crypto assets do not guarantee future profits. The ARB noted that similar requirements apply to standard financial services, as any advertising of financial products must provide full disclosure.

The regulator added that influencers andrepresentatives of cryptocurrency companies can disseminate information about them only if they comply with the requirements of regulatory authorities. If influencers are not considered qualified investors by a regulator's criteria, these individuals may only share factual information about a cryptocurrency product, without providing additional crypto trading or investment advice.

We would like to remind you that in October the Supervision Departmentin the financial sector of South Africa (FSCA) introduced amendments to the legislation that equate digital assets to financial products. Earlier, the South African Reserve Bank (SARB) urged banks not to abandon virtual asset service providers (VASPs).