Facebook’s new rules for crypto-related ads aim to weed out the bad apples

Photo credit: Facebook

When it relaxed its ban on cryptocurrency-related ads a few weeks ago, Facebook also threw in some new rules.

It said that crypto companies must show “licenses they have obtained, whether they are traded on a public stock exchange, and other relevant public background on their business” to be able to run ads about their products and services on the social network.

Facebook, however, continues to ban ads specifically for initial coin offerings (ICOs) or binary options. Binary options involve betting on the price of a currency to go up or down against another currency after a certain amount of time. Such trades are illegal in some countries because they’re susceptible to price manipulations.

Facebook said it previously banned all crypto-related ads to avoid promoting financial products and services frequently associated with “misleading or deceptive” practices.

John DeCleene, associate fund manager at investment firm OCIM, says the new relaxed rules will help promote the blockchain industry, while weeding out bad actors.

“Allowing selected cryptocurrencies to advertise will slowly introduce high-quality crypto projects to the general public, which will in turn change people’s mindset when it comes to this asset,” he says. Such projects have solid use cases, track record, and development teams, he notes.

The public has been spooked by news of scams and exchange hacks. From January to July this year, a total of US$731 million was stolen from crypto exchanges, with two of the biggest hacks coming from Asia. Japan’s Coincheck and South Korea’s Coinrail lost US$500 million and US$40 million, respectively, in crypto heists.

Photo credit: Pixabay

Only legit firms can apply

Explaining how the Facebook ads application process works, Violet Lim, co-founder and CEO of blockchain-based dating app Viola.Ai, says the social network will first access the advertiser’s account to see if it’s legitimate. It will then check for licenses and do a background check on the company, before approving any ads about its crypto projects.

“This raises the standards for the advertisements as well as the crypto industry as a whole,” she claims.

“I believe well-established firms will benefit most,” DeCleene adds.

According to Huobi Research’s estimates, as of 2017, 20 million users go online to avail of blockchain services. They make up about 0.5 percent of total internet users worldwide, and are a very small community compared to Facebook’s more than 2 billion users.

Not everyone’s looking to advertise on Facebook

Self-serving?

ICO ads remain barred