Despite its enormous popularity, several governments have yet to regulate the bitcoin sector. As a result, investors are prone to scams and frauds. One such threat is deceptive advertising, which causes some investors to lose their hard-earned money.
Sensing the gravity of the situation, various governments have announced plans to tighten down deceptive crypto advertising and enact regulations to protect naive investors. Before we look at the nations that have taken steps to safeguard consumers from ad-based frauds, let’s check why these advertisements may be dangerous.
What exactly is the issue with cryptocurrency advertising?
Cryptocurrencies are very volatile, and trading them without a thorough grasp of market dynamics, like with many other assets, may be dangerous. Advertising, especially that pushing specific crypto items or firms, might lead to users trading rashly, resulting in losses.
“Many of these adverts get meant to induce FOMO, and appropriately so, the crypto market is a very dynamic area with great opportunities,” says a former US Consumer Financial Protection Bureau director who joined the leadership team of crypto risk monitoring business Solidus Labs. It’s vital to note, too, that FOMO frequently leads to fraud by pressuring customers and investors to make snap judgments.” That may be why nations such as the United Kingdom, Spain, and Singapore have finally made steps to regulate the crypto advertising industry.
List of Countries That Are Banning Crypto
Here’s the rundown of the countries that are not in favor of crypto regulation and are rooting out this digital currency.
The Advertising Standards Authority (ASA), the UK’s promotion watchdog, has had run-ins with cryptocurrency companies like crypto.com for deceptive advertising. The British government is now contemplating passing more sweeping legislation. What will they do to accomplish this? The Chancellor of the Exchequer, Rishi Sunak, has stated that bitcoin marketing would get regulated by the Financial Conduct Authority (FCA) in the same manner that other financial advertising is regulated.
To summarize, the UK government brings crypto-asset marketing “within the ambit of financial promotions regulation.” The government expects new rules would encourage “crypto-asset market innovation.” They don’t want to prohibit cryptocurrency trading. They attempt to enact much-needed laws in the nation around crypto investment promotion.
In a future parliamentary meeting, the government will present this new law. According to a PTI article, Sunak stated, “We are maintaining consumer protection while also fostering crypto-asset market innovation.”
While the UK government has been pushing down on individual crypto firms advertising and promoting, Spain is adopting an approach. It has issued warnings to the whole crypto business in the nation.
The Spanish financial authority, Comisión Nacional del Mercado de Valores (CNMV), has announced new crypto advertising regulations that will go into effect on February 17th, 2022.
Celebrities, influencers, and crypto companies in the nation will be subject to these rules. According to the guidelines, crypto advertisements must include a portion warning individuals about the danger of losing their money. All cryptocurrency adverts will get required to provide links for further information. That might be beneficial to first-time investors.
Singapore has enacted the most strict crypto ad regulations. They’ve virtually outlawed crypto advertising in public places and social media platforms that cater to the general population.
On January 17th, 2022, the Monetary Authority of Singapore published a new set of “Guidelines On Provision Of Digital Payment Token Services To The Public.” Banks and financial institutions permitted to provide crypto services, as well as crypto exchanges in the nation, would be subject to the prohibition. The restriction also prevents crypto businesses from paying other parties to advertise their services or crypto trading, such as social media influencers or websites.
Experts have advised investors to proceed with care and avoid making hasty judgments when investing in cryptocurrencies. As said, “consumers should do due research and make intelligent judgments on how and when to interact with crypto markets, just as they would with any other investment opportunity.” For instance, they should inquire whether the platform takes risk management and compliance seriously.
Algeria has banned the usage of bitcoin since enacting a finance law in 2018, making it unlawful to acquire, trade, use, or keep virtual currencies.
Since 2014, Bolivia has imposed a blanket prohibition on the use of Bitcoin. The Bolivian Central Bank issued a decision prohibiting it, as well as any other currency not authorized by a country or economic zone, from being used in Bolivia.
Throughout the year 2021, China has intensified its crackdown on cryptocurrency. Officials in China have frequently warned its citizens to stay away from the digital asset market, and they have cracked down hard on mining and currency exchanges in the nation and abroad.
Yin Youping, the Deputy Director of the Consumers’ Bank of China’s (PBoC) Financial Consumer Rights Protection Bureau, described cryptos as speculative assets on August 27 and advised people to “guard their purses.”
Attempts to undermine Bitcoin, a decentralized currency unaffected by governments or institutions, are sometimes seen as the Chinese government’s desire to develop its e-currency.
The PBoC aspires to be one of the world’s first major central banks to launch its digital currency, allowing it to keep a closer check on the transactions of its population. On September 24, the PBoC went even farther, officially prohibiting bitcoin transactions in the nation.
Financial institutions in Colombia are not permitted to help with Bitcoin transactions. Financial institutions were advised in 2014 by the Superintendencia Financiera not to “protect, invest, broker, or manage virtual money operations.”
In 2018, Egypt’s Islamic advisory authority, Dar al-Ifta, issued a religious decision defining Bitcoin transactions as “haram,” or illegal under Islamic law. While not legally enforceable, Egypt’s banking rules got modified in September 2020 to make it illegal to trade or promote cryptocurrency without obtaining a Central Bank license.
From January 1, 2018, Bank Indonesia, the country’s central bank, published new laws prohibiting the use of cryptocurrencies, including Bitcoin, as a form of payment.
The Iranian administration has a complicated connection with Bitcoin. Iran has turned to the profitable industry of Bitcoin mining to finance imports to avoid the harshest effects of punishing economic sanctions.
While the Central Bank forbids the trade of cryptocurrencies created outside of the nation, it has provided incentives to encourage Bitcoin mining.
Iran accounts for around 4.5 percent of global Bitcoin mining, with profits of over $1 billion (€843 million) estimated by blockchain analytics firm Elliptic.
Iran has provided licensed miners low-cost electricity in exchange for all mined cryptos being sold to the Central Bank for the crypto sector to thrive.
India’s attitude toward cryptocurrency is deteriorating. On November 23, the Indian government declared its intention to present a new law in the Indian parliament that would create a new central bank-backed digital currency and prohibit the use of practically all cryptocurrencies.
It proposed criminalizing the possession, issue, mining, trading, and transfers of crypto assets earlier this year. Prime Minister Narendra Modi has stated that he wants to guarantee that cryptocurrency “does not wind up in the wrong hands, spoiling our young.”
While Bitcoin isn’t illegal in Russia, it is the subject of a long-running debate. In July 2020, Russia established its first crypto-regulation regulations, designating bitcoin as taxable property for the first time.
Cryptocurrencies get used to route money to criminal sources, according to several countries that have outlawed them, and the spread of crypto might disrupt their financial systems. We hope you have enjoyed reading the article and found it helpful.